Title Insurance And Clearing Title
Before you close, a lender confirms the home has clear title and insures it. Here is how the title search, the lender’s policy, and endorsements protect your loan.
What title insurance covers
The protection required to close
- A lender’s policy protecting the first lien position
- Confirmation of clear and marketable title
- A title search of the public record
- Endorsements that extend coverage where needed
- A licensed title company in the property’s state
- An optional owner’s policy for your own protection
Title insurance is required
A title search clears the way
It protects the lender’s lien
Endorsements add coverage
Written on ALTA forms
Clear title lets you close
What Title Insurance Is
Coverage that confirms clear ownership
Title insurance protects against problems in the ownership history of a home, such as an unknown lien, an error in the public record, or a competing claim. Because the home secures your loan, a lender requires a policy that insures its lien before you can close.
It starts with a title search. A title company reviews the public record for the property, then issues a commitment listing what it will insure and any exceptions it will not. Anything that clouds the title is worked out before closing.
The lender’s policy is written on a standard ALTA form and protects the lender’s first lien position. You can also buy an owner’s policy that protects your own stake in the home. In some states, an attorney title opinion letter can be used instead.
Why title work matters to you
Title insurance protects your ownership and the lender’s loan against surprises from the past. Here is how it works.
Required Before You Close
A lender requires a title insurance policy that insures its lien before the loan can close. It is one of the standard protections that makes a mortgage possible, alongside your homeowners insurance.
A Search Comes First
A licensed title company searches the public record for the property and issues a commitment. It lists what will be insured and any exceptions, so everyone sees the title clearly before closing.
Clouds Are Cleared First
If the search turns up an old lien, a judgment, or an error in the record, it is resolved before you close. Clearing these clouds on title is what lets the sale move forward.
The Lender Is Protected
The lender’s policy protects its first lien position for the life of the loan. If a covered title problem appears later, the policy stands behind the lender’s interest in the home.
Endorsements Add Coverage
Specific endorsements can be added to the policy to cover particular risks or loan features. They tailor the coverage to the property and the loan without changing the base policy.
You Can Protect Yourself Too
The required policy protects the lender. You can add an owner’s policy that protects your own equity in the home against covered title claims, which many buyers choose to do.
Hear From Homeowners Like You
Frequently Asked Questions
Common questions about title insurance.
It is coverage that protects against problems in a home’s ownership history, such as an unknown lien, a record error, or a competing claim. A lender requires a policy to close.
Because the home secures your loan. The lender’s policy insures its first lien position, so its interest is protected if a title problem surfaces.
A licensed title company reviews the public record for the property and issues a commitment listing what it will insure and any exceptions before closing.
An old lien, judgment, or record error is cleared before you close. Resolving these clouds on the title is part of getting to the closing table.
The required policy protects the lender. An owner’s policy is optional and protects your own equity in the home against covered title claims.
It is the standard title insurance form used across the industry. The lender’s policy is written on an ALTA loan policy form.
In some states, an attorney title opinion letter can be used in place of a policy. Availability depends on the property’s state and the program.
Find out what you qualify for
Getting ready to close and want to understand the title work? We can walk you through what the policy covers and why.
Get Pre-Qualified- Consumer Financial Protection Bureau, what is owner’s title insurance?
- Consumer Financial Protection Bureau, what is lender’s title insurance?
- Fannie Mae, Selling Guide B7-2-05, title exceptions and impediments
Title requirements, closing services, and program eligibility are subject to credit approval, property and title review, and state law. Title insurance forms, endorsements, and available alternatives depend on the property’s state and the specific program. This page is informational and is not a commitment to lend. Not all applicants will qualify.