Mortgage Glossary
Title Insurance
Insurance that protects you (and your lender) against ownership disputes or defects in the property's title history.
What It Means
When you buy a home, you need to know that the seller actually has the legal right to sell it — and that no one else can later claim ownership. Title insurance protects against exactly that.
There are two types:
- Lender's title insurance: Required by most lenders; protects the lender's investment
- Owner's title insurance: Optional but highly recommended; protects your ownership
Title insurance covers things like:
- Previous undisclosed liens (money owed against the property)
- Forged deeds or signatures in the chain of title
- Errors in public records
- Undisclosed heirs claiming ownership
Unlike other insurance, it's a one-time premium paid at closing — not a recurring cost.
Real-World Example
"After closing, someone discovers that the previous owner had a contractor lien they never paid. Without title insurance, you could be responsible. With it, the insurance company handles it."
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Definitions are for educational purposes only and do not constitute financial or legal advice.