Quick answer
If you’re getting a mortgage, most lenders require a lender’s title policy, which protects the amount they lend. The policy that protects you as the buyer is an owner’s title policy, and it’s usually optional. It can help if someone later claims a right to the home from before you bought it, such as a contractor who wasn’t paid. You can usually shop for your title insurance provider.
Rules on this page were checked on against CFPB guidance. Program terms are subject to agency and lender guidelines and may change, and individual lenders can set stricter rules.
Is title insurance mandatory?
Transcript: So is title insurance mandatory or optional? If you're getting a mortgage on your property, the lender's title policy is going to be mandatory. And that's a benefit for you because that covers you. If John buys a house and there's no title insurance and there's a lien against that property, then now John owns that lien as well. So title insurance is to cover your backside when you purchase a home so that you're not also purchasing someone else's debt. So if you have more questions, give us a call. Be happy to talk with you. So when you do buy, you buy with confidence and you buy with Valor.
A lender’s title policy protects the lender. The policy that protects you as the buyer is an owner’s title policy, which is usually a separate, optional purchase.
What’s the difference between the two policies?
| Lender’s policy | Owner’s policy | |
|---|---|---|
| Protects | The lender, for the amount it lends | You, as the homeowner |
| Required? | Most lenders require it | Usually optional |
| Who usually pays | Depends on your contract and local custom | Depends on your contract and local custom |
General information, not legal advice. Coverage depends on your actual policy. Ask your title company or an attorney about the details.
In the video, Christopher’s example is John, who buys a house with a lien against it and then ends up owning that lien. The note under the video clears up one point: a lender’s policy protects the lender, so it’s the owner’s policy that would protect you.
What kinds of problems does it cover?
The CFPB gives two examples of legal claims: a previous owner’s failure to pay taxes, and contractors who say they weren’t paid for work done on the home before you bought it. A title search tries to find problems first, but it can miss some. Title insurance doesn’t cover everything, such as problems that begin after you buy, so read the policy’s exclusions.
Who picks the title company?
You can usually shop for your title insurance provider separately from your mortgage. At Valor Mortgage, the title company is your choice or your agent’s. If you buy both policies, the CFPB says the total cost is usually lower if you use the same provider for both.
How do you see what it costs?
Your lender shows title charges on your Loan Estimate, and final costs on your Closing Disclosure, which you must receive at least three business days before closing. Compare both forms, and ask about any charge you don’t understand. See how closing costs work.
Is an owner’s policy worth it?
That’s your decision. The cost is usually a one-time charge at closing, and the home is likely one of your largest purchases. Weigh that charge against the risk of an old claim you would have to deal with yourself. A cash buyer has no lender requiring a policy, so the choice is entirely theirs.
Title insurance FAQ
Do you pay title insurance every year?
Generally no. Title insurance is usually paid once at closing, not as an ongoing premium. It isn’t the same as your homeowners insurance.
Do you need title insurance if you pay cash?
No lender would require it, because there is no lender. An owner’s policy may still be worth considering, since the same claims can arise.
Do you need title insurance when you refinance?
A new lender usually requires its own lender’s policy on the new loan. It will appear as a closing cost on your Loan Estimate.
Where these rules come from
| Rule or figure | Source | As of |
|---|---|---|
| Owner’s and lender’s title insurance | CFPB, owner’s title insurance | Nov 5, 2026 |
| Closing Disclosure timing | CFPB, Closing Disclosure | Nov 5, 2026 |
| Loan Estimate | CFPB, Loan Estimate | Nov 5, 2026 |
Related answers and guides
- What happens during mortgage underwriting?
- Can you close on a house online?
- What’s included in a mortgage payment?
- More answers on buying a home.
- About Christopher Armantrout.
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Valor Mortgage, LLC · Christopher Armantrout, Mortgage Loan Originator, NMLS #1210804 · Valor Mortgage, LLC is powered by Encore Lending Group, LLC, NMLS #1249911 · Licensed in Tennessee · Equal Housing Opportunity
724 S Main St, Springfield, TN 37172 · (615) 671-9178 · christopher@valor.mortgage · NMLS Consumer Access
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