Sander Scott explains why lenders get loan policies to protect the mortgage amount and verify the borrower's finances. An owner's policy works differently, covering up to the property's sale price instead.
The reason a financial institution would get a loan policy is because they're, you know, forking over money basically to have somebody take a loan out. And so they want to make sure that obviously they're, you know, financially backed, that the debt-to-income ratio is good and all that kind of stuff. So once they give the buyers the money, then they want to go back to make sure that they're insured with a title company to back that money. Like I said, it goes only up to the amount of the mortgage. The owner's policy goes up to the amount that the sale, the price of the property.
