When thinking about the process of buying a home, the people involved that come to mind are usually the buyer, the seller, the realtor, and the mortgage lender. But, what about the title company? This is a crucial member of the process when purchasing a house. In this blog post, we’re breaking down what title companies are responsible, why title insurance is important, and how to choose a company you trust!
WHAT DO TITLE COMPANIES DO?
A title company will investigate a property’s title for discrepancies or undiscovered liens. They will also issue title insurance to the lenders after the title is deemed clear. Every home will have a house title that will show the past ownership of the property, the physical aspects of the house, and any liens on the house. A lien is a legal claim of a creditor on a borrower’s property, to be used as security for a debt. So, if the seller has not paid off their mortgage on the house, they will have a lien on their title. The title company you choose to work with is a neutral third party that you trust to research and insure the home you are buying.
WHAT IS TITLE INSURANCE?
Title insurance isn’t required, but it is highly recommended. This type of insurance protects you against issues that would affect legal ownership of the property. In the event you are brought to court over ownership of your property, title insurance will ensure you are protected at no cost to you. If the claim against you is valid, the title insurer will protect you and allow you to maintain ownership of the home or mortgage.
WHAT CAN HAPPEN WITHOUT TITLE INSURANCE?
Without title insurance, things can get quite messy. An extreme example is a seller may try to sell a home that they do not own. However, most situations are not nearly as drastic. Situations where not having title insurance can become an issue often include other people. For example, two family members who have purchased a house ten years ago but haven’t spoken since. The seller will need the co-owner’s permission to sell. Another example of issues that may arise are situations from the past. A divorced woman sells her home, not realizing she needs her ex-husband to sign off on the sale. In both situations, a title company will step in to help navigate through the complicated issues.
HOW TO CHOOSE A TITLE COMPANY
With all the details that can cause stress during the process of buying a home, choosing a reliable title company should not be one of them. We recommend that our clients choose a title company that treats each transaction as a priority with a focus on customer service and attention to detail. Our loan officers will be able to recommend properly vetted title companies to work with.
If you have more questions on title companies and how to select the right one for you, reach out to our team today!