During the mortgage closing process, a number of parties are involved. One party in particular is of key importance to closing proceedings, and that is the title company. What is a title company? A title company is any entity that conducts a title search into the legitimacy of the ownership of a property during the mortgage closing process. A title search is an in-depth examination of the historical records associated with a property. These records include name indexes, court records, property indexes, deeds, and other important documents that verify whether the seller has the right to transfer ownership. These documents will also verify whether the property has any defects or legal claims, liens, restrictions, or encumbrances against it. These include judgments against the seller, restrictions that limit the use of the land, and any unsatisfied mortgages or unpaid taxes.
What role do title companies play in the mortgage closing process?
The title company also establishes whether a seller is legitimate and has the actual rights to sell the property in the first place. Title companies also issue title insurance for both the lender and the buyer that protects them from any issues with the property. The owner’s title insurance protects the buyer in the event that someone challenges their ownership of the home, while the lender’s title insurance protects the lender from any ownership disputes or liens that arise that were not discovered during the title search. A title company will also act as an escrow agent and hold deposits and other fees until the entire transaction is completed. They essentially issue insurance policies, review titles, file and record paperwork, and facilitate closing.
When you’re buying a home, who gets to choose the title company?
It is usually up to the buyer to hire a title company as they pay for the title search and title insurance. The only time the seller chooses the company is when they have to pay for both the lender’s title policy and buyer’s policy. During the closing process, the seller is responsible for the cost of buyer’s title insurance and the buyer is charged for the cost of the lender’s title insurance policy.
Who pays the title company at closing?
The party that pays for the title company’s services will depend on what terms are negotiated during the buying process. Often it is the buyer that covers this cost as they are responsible for the entire slew of closing costs during the mortgage closing process. If, however, both parties agree to share the costs, one party will pay for the buyer’s title insurance while the other will pay for the lenders. Title search fees will be covered by whichever party decides to take them on, but it is usually the buyer’s responsibility as it comes under closing costs.
Title companies play multiple roles during the mortgage loan closing processing support from conducting the title search to issues title insurance for both the lender and buyer to prevent any issues arising after the property title has been transferred from the seller to the buyer. It is usually the buyer that hires the title company given that they have to pay for the title search fees as part of the closing costs. The party that pays for the services the title company provides will depend on the terms that are agreed upon during negotiations.