Who typically purchases the mortgage policy of title insurance?

Who typically purchases the mortgage policy of title insurance?

• A. Lender
• B. Title insurer
• C. Mortgagor (borrower)
• D. Seller

Answer: (C)

The mortgage (lender’s) title insurance policy is there to protect the lender’s security interest in the property if a title problem surfaces later. The lender requires this coverage to guard the loan, and the premium for that policy is typically paid by the borrower (the mortgagor) at closing. The policy itself names the lender as the insured, not the borrower, but the buyer/purchaser of the policy is usually the borrower because they’re the one obtaining the loan. There is also an owner’s title policy that protects the buyer’s own ownership interests, and that cost is handled separately (often by negotiation between buyer and seller). So, the borrower is the one who typically purchases the mortgage policy because it protects the lender, while the policy is paid for by the borrower.

The mortgage (lender’s) title insurance policy is there to protect the lender’s security interest in the property if a title problem surfaces later. The lender requires this coverage to guard the loan, and the premium for that policy is typically paid by the borrower (the mortgagor) at closing. The policy itself names the lender as the insured, not the borrower, but the buyer/purchaser of the policy is usually the borrower because they’re the one obtaining the loan. There is also an owner’s title policy that protects the buyer’s own ownership interests, and that cost is handled separately (often by negotiation between buyer and seller). So, the borrower is the one who typically purchases the mortgage policy because it protects the lender, while the policy is paid for by the borrower.