Escrow & Title
Which type of title insurance policy protects the lender?
AOwner's policy
BBuyer's policy
CLender's (mortgagee's) policy✓ Correct
DSeller's policy
Explanation
A lender's (mortgagee's) title insurance policy protects the lender's interest in the property up to the loan amount. The owner's policy separately protects the buyer.
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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.
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.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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