Escrow & Title
ALTA (American Land Title Association) title insurance provides coverage for:
APhysical damage to the property after closing
BTitle defects including those that may not appear in public records, such as forgery or undisclosed heirs✓ Correct
COnly defects that appear in the public records
DThe lender's physical inspection of the property
Explanation
ALTA title insurance policies typically provide broader coverage than standard policies, protecting against both recorded and unrecorded title defects such as fraud, forgery, and undisclosed heirs.
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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.
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.
Abstract of TitleA condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.
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.
Math Concepts
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