Escrow & Title
A lender's title insurance policy (mortgagee policy) in NJ protects:
AThe homeowner's equity
BThe lender's interest up to the loan balance✓ Correct
CThe title company against future claims
DThe seller's proceeds
Explanation
A lender's (mortgagee's) title insurance policy protects the lender's interest in the property up to the outstanding loan balance, decreasing as the loan is paid down.
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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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