Escrow & Title
A Vermont lender's title insurance policy protects:
AThe buyer against future title defects
BThe lender's mortgage interest against title defects discovered after closing✓ Correct
CThe seller against buyer default
DThe escrow agent against errors
Explanation
A lender's title insurance policy (loan policy) protects the lender's mortgage interest against pre-existing title defects. A separate owner's policy is needed to protect 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.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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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