The role of a title company is to ensure that the title to a piece of property is verified, free of any unresolved issues, and to provide title insurance for the home. This insurance protects both the lender and owner of the property against any claims or lawsuits arising from disputes over the title.
Many title companies also provide escrow services, where they hold your Earnest Money Deposit until the time of closing.
How is a title determined valid?
A title company verifies the legitimacy of a title to ensure the buyer becomes the rightful owner of the property. In order to make this happen, the title company conducts what is called a title search. They look through and examine property records in order to determine who currently owns the property and to rule out the possibility of anyone else claiming ownership.
Included in the search are any outstanding mortgages, liens, unpaid taxes, or judgements associated with the property. Before issuing the title insurance, the title company will provide the buyer with a breakdown of the property history and what was found in the search.
What is title insurance?
Title insurance protects the lender and owner from any claims arising from disputes over ownership of the property.
The two types of title insurance are lender’s and owner’s insurance. Lender’s insurance protects who is issuing the mortgage loan. The cost of this type of policy is usually a percentage of the loan amount. The more payments you make on your loan, the smaller this number becomes. Once you pay off the loan, the policy will end.
The owner’s insurance protects the homebuyer from any title-related issues that may arise before, during, and after a title search. This policy price is based on a percentage of the home’s sticker price, unlike the lender’s insurance. There is usually a onetime title insurance fee during the time of closing and this policy lasts as long as you own the home.
Choosing a title company
The best way to go about picking the right title company is to ask your Real Estate agent and peers who have recently purchased a home for recommendations. Once you have a handful of suggestions, make sure to do your research on each individual company to find the right one for your needs.
Always make sure the company you choose is licensed and provides secure services. The cost for these services varies depending on the company, state, and the size of the loan.
When do you meet with the title company?
More than likely you will meet with the title company at the time of closing. If they are providing you escrow services, you may also meet with a title agent when you make your deposit. If anything comes up in the title search that is of concern, this will likely warrant a meeting.
