Which insurance is the lender required to have the borrower purchase?

Lender's title insurance is a type of insurance policy that protects the lender against any potential claims or legal issues that may arise concerning the title of the property being financed. When a borrower takes out a mortgage, the lender needs assurance that their investment is secure; this is where lender's title insurance comes into play.

The policy protects the lender for the duration of the loan, covering risks such as disputes over the property title, unrecorded liens, or defects that could arise after the purchase. It is a crucial part of the closing process and is typically required by the lender as a condition for approving the mortgage. In contrast, owner's title insurance is optional and protects the homeowner, not the lender. Home inspection and home warranty, while important aspects of real estate transactions, are not mandated by lenders. They focus more on the condition of the property and guarantees for repairs, rather than securing the lender's interest in the title.