I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer go check it out

Saw this question on r/FirstTimeHomeBuyer and wanted to share a thorough answer for anyone else wondering the same thing:

Lender vs owner title insurance?

I learned about the importance of title insurance through this sub, but do I need an owner policy or is the lender title insurance sufficient? I saw title insurance on our paperwork so I asked about it, and the lender said "Title insurance will be on this, you are required to have lenders title insurance, but owners title insurance is optional- although we recommend it." Thanks in advance!

update: additional context is that it's a townhouse in an HOA, purchased from the original owner. I am pretty much convinced to add it, but it hurts because we are cash poor with the down payment. (the monthly payment is fine and we have an emergency fund remaining, just cash poor outside of the emergency funds lol)

You might not need to worry about it. Sellers usually pay for the owners policy.

Just a quick recap on this:

  • lenders title insurance covers the lenders claim on the house against any other claims
  • owners title insurance covers the owner over other claims on the house

Claims against the house can look like:

  • heirs believing they haven't gotten their due amount (equity in the house, or the house itself)
  • plumbers not getting paid
  • unpaid tax liens against the house

You'll want to get protected against things like this.

Check your contract if the seller is covering the owner's title policy.

If they aren't, I'd recommend it too

Sam

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer here's the book on reddit.

Originally shared by u/SamTMortgageBroker in r/NewbHomebuyer — view the original thread.