Escrow & Title
In Montana, a title insurance policy for the lender (loan policy) differs from an owner's policy in that the loan policy:
AProvides broader coverage than the owner's policy
BProtects the lender's interest up to the loan amount and decreases as the loan is paid down✓ Correct
CIs optional while the owner's policy is required
DCovers the same risks as the owner's policy with no differences
Explanation
A lender's title insurance policy (ALTA loan policy) protects the lender's mortgage interest up to the outstanding loan balance. As the loan is paid down, the policy coverage decreases accordingly.
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Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
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