Escrow & Title
In Ohio, a buyer's lender requires a 'lender's title policy.' What does this cover?
AThe buyer's equity in the property
BThe lender's mortgage interest up to the loan amount against prior title defects✓ Correct
CThe property's market value against future decline
DPhysical damage to the property
Explanation
A lender's title policy protects the lender's mortgage interest — up to the outstanding loan balance — against title defects that existed before the policy was issued. It does not protect the buyer's equity.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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