Sometimes brokers’ borrowers are startled by the costs involved in financing a home. Orion and our AEs do our best to keep costs low, and pricing aggressive, and explain that many costs are not even set by us. For example, homeowner’s insurance costs, pushed by insurance companies, have increased as we moved through 2024 and through the first quarter of 2025. Which brings up the question, “What is title insurance and why do you need it?”

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Brokers can remind borrowers that when there is a property sale with a mortgage, there are two title insurance policies that are issued. One policy, which is typically paid for by the seller, protects the new owner should any claims against their title arise in the future. Claims could include someone claiming they have ownership rights, and the property should not have been sold, perhaps a divorce or probate sale in the past. The boundaries of your client’s property are covered, a neighbor builds a wall on what they think is the property line, and it is not, or an easement for rights of way for ingress and egress, such as the power company or other utility, on the property may have limits, exclusions, or may have changed over the years.

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The ownership, the physical boundaries, and right to access are insured by the title company, any disputes that arise later that may cost your client money for correction or loss will be covered by the policy.

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If there isa mortgage as part of the purchase transaction, or if your client is refinancing, the lender requires a title company policy that ensures that the only liens that will be against the property will be those disclosed prior to closing by the title company. This policy is paid for by the buyer, or homeowner is are finance.

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Prior to closing the title company will provide the lender with a preliminary title report that shows liens for taxes, perhaps a homeowners’ association if applicable, and other entities that will be on the title at closing. If there are current mortgages, loans, judgments, back taxes, etc., that are currently on the property, the title insurance is guaranteeing to the lender this will be paid at, or before closing, and will not be on the title after closing.

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Orion or any lender is very concerned about this because they do not want a lien holder filing a claim and requesting payment or it will foreclose on the property that has priority over the lender if there is a foreclosure resulting in the lender losing a lot of money. With a purchase, the lender will require the policy insuring the buyer will have complete ownership and control of the property as that is the person(s), or entity, that they are funding for the purchase.

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If your client is buying a home with a mortgage, yes, they will need title insurance, two separate policies, one paid for by the seller and one by the buyer. If they are buying a home without a mortgage, your client does not need the policy that protects the lender, and if they want to risk it, they do not need the policy insuring their ownership and rights after closing though it is highly suggested that they do have the seller provide this policy. If your client is refinancing, they will need the policy insuring that the only liens on the property after closing are those disclosed in the preliminary report.

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So, the basic answer is that if your client is buying or refinancing their home they will need title insurance. Your Orion AE can answer any questions that you have.

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