Insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers.

Title companies provide title insurance to buyers, sellers, lenders and developers, essentially anyone who has an interest in real estate. Services vary throughout the country, depending on local practices and laws. In many states, title companies handle escrow as well as perform and insure title searches. A title search involves searching public records to ascertain if the seller has the legal right to sell the property. In other states, attorneys conduct title searches.

Considering what is at stake, purchasing title insurance is very important. It protects the homeowner, for as long as he owns the property, and the lender against any title defects that may arise. If the homeowner's legal ownership of the property is challenged, the title insurance company will defend the homeowner in court, and if loses, will reimburse the homeowner and the lender. Just as hazard insurance, all lenders require their borrowers to purchase title insurance to protect their interests.

In a refinance, the homeowner must re-purchase title insurance. Depending on the length of time between the two home finances, the homeowner may be entitled to a deep discount in premium.

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