Posted by David Krulac on August 28, 2001 at 16:29:03:
There are several different insurances, homeowners, mortgage, and title.
- Homeowners insurance covers fire, theft, vandalism, natural diasters, etc.
- Mortgage insurance covers mortgage default and pays off the mortgage if the owner dies or is incapacitated. This is similar to life insurance and disability insurance and only pays off mortgage if you dies or are unable to work.
- Title insurance insures the lender and sometimes the buyer also against defect in the title, unpaid taxes, leins, mortgages, judgements, forgeries, etc, that could affect your title. Say a divorcing couple is the seller and the husband forges the wifes signature on the deed, title insurance would cover something like that. A tax bill from 1960, thought to have been paid turns up unpaid now, title insurance would cover that.
- Title search is the process done at the court house where they search the title back 60 or 100 years making sure that each sale was proper, that all the right people signed the deeds and that all mortgages, leins and judgements were paid, or will be paid at settlement. The title search abstract is the document that the title insurance company uses to determine if they’ll issue a title insurance policy. They will want all outstanding issues to be resolved before or at settlement.