Title Company Overview
A title company issues title insurance to protect the property. Title insurance protects the owner and lender from lawsuits or claims arising out of disputes about the title.
The title company may also maintain escrow accounts to ensure that the money is only used for settlement and closing costs. A settlement agent from the title firm will present all documentation and explain it to the parties. He or she will also collect closing costs and distribute the funds. The title company will also ensure that all new titles, deeds, and other documents are filed with appropriate entities.
Here are some things potential home buyers should know about title insurance.
How Does A Title Company Determine If A Title Is Valid?
A title company verifies that a property title is valid so that the buyer can be sure that he is the rightful owner once he has purchased the property. The title company will conduct a title search to verify that the title is valid. This is an extensive examination of property records that confirms that the property owner is the legal owner.
During the title search, the title company also looks for any outstanding mortgages, liens, judgments, or unpaid taxes associated with the property, as well as any restrictions, easements, leases, or other issues that might impact ownership. The title company may also require a property survey, which determines the boundaries of the plot of land that a home sits on, whether the home sits within those boundaries, whether there are any encroachments on the property by neighbors, and any easements that may impact an ownership claim.
A title company prepares an abstract of title before it issues title insurance. It is basically a summary of what it discovered during the title search. It will then issue title opinion letters, which are legal documents that confirm the title's validity.
What Is Title Insurance?
After the title has been validated, the title company will most likely issue a title insurance policy to protect lenders and owners from any legal costs or claims that could arise from disputes about the ownership of the property.
There are two types of title insurance. One is owner's insurance which protects property owners from title issues, and the other is lender's insurance which protects mortgage companies. The lender's insurance will be paid by you, the home buyer. However, it is a good idea for you to have owner's insurance as well. In some parts of the country, sellers are responsible for these policies, while ,the buyer must pay in others.
Let's say you buy a house and get title insurance for both the buyer and the lender. But then, someone claims they are the rightful owners of the home. If the title is incorrect and they are the rightful owners of the house, your title policy will likely pay the property's value and the lender the amount they lent to you to purchase it.
How Do You Choose A Title Company?
Ask your agent, your peers who recently purchased a home or your lender for suggestions on a title company. Then, do your research on the recommended title companies.
You should look for a title company with years of experience in this field (have they handled hundreds or even thousands of transactions like these?). To find out if the company has ever been subject to complaints, contact the Better Business Bureau.
Also, you should shop around to find the best rates in your region. If you purchase owner's title insurance, ensure that there are a few exclusions and that the policy covers the entire home's purchase price.
What Is The Charge For A Title Company?
Title insurance costs vary depending on how large the loan is and the state it is located in. The good news? The premium is an annual fee that you pay at closing and not an ongoing expense.
The Federal Reserve states that a lender's policy for a $100,000 loan can be anywhere from $175 in one State to $900 in another. Depending on how large the loan is and where you live, a buyer's policy will typically cost you an additional amount, usually around a few hundred dollars.
You may be eligible for a discount on your title insurance if you have sold the property within the last five years. Just call to inquire.
What Time And Where Do You Meet With The Title Company?
An agent from the title company may be available to meet you or speak with you on several occasions. You may first decide to meet with several agents from title companies before buying your home. This will help you choose the right company.
The agent might reach out to you if the title company has an escrow account. You can also contact him with any questions.
If you have your closing handled by a title company, you will meet with the settlement agent in person. Before you sign anything, the settlement agent will go over all documents involved in the settlement. You will most likely meet with an agent if there is a problem with the title.
Consumers can contact their title company anytime to ask questions about title searches, title abstracts, or title insurance.
