First Time Buyers: What you Need to Know About a Title Company
The title company that you choose can greatly influence the closing process. It can determine whether a property sale/purchase will be successful or not. If you are asking yourself whether you can use the seller’s title company, the answer is YES. Here are some qualities to look for in a title company:
How a Title Company Operates
Title companies are crucial to successful real estate transactions and have several key components:
Title companies act as an agent on behalf of the insurance company, the buyer, the seller, mortgage lenders, and anyone else involved in a real estate transaction. Acting as an agent, title companies also secure signatures from both buyers and sellers for closing documents, receives and distributes payments, and records proper documentation.
In addition, title companies act as escrow officers holding onto documents and money, and releasing it according to written instructions from the buyer and seller.
Title companies review titles on properties to ensure they are clear of any liens, unpaid property taxes, foreclosures or other legal actions, fraud, or other problems associated with the real estate. They do this by closely examining public records and give their report of it to both the buyer and seller. They also verify that the seller really does own the property and is allowed to sell it.
Many title companies, like Northern Title, also issue insurance policies. They contract with an underwriting company to issue one in case any future legal action is taken against your title.
Do they offer Title Insurance?
When selecting a title company, look for one that offers title insurance. Title insurance protects both real estate owners and lenders against loss or damage from past occurrences (as opposed to traditional insurance which protects against future occurrences).
Typically homebuyers will need an owners insurance policy, and a lender’s policy. Here is some other helpful information on title insurance:
Many states regulate title insurance prices so there may not be a price difference from company to company. To know if you’re in a regulated area, contact your lender or state insurance department.
When determining the coverage you need, take into account that owners policies protect against fraud, forgery, undisclosed heirs and spousal claims, etc. If you need additional additional protection, you will need to up your coverage.
The payer for title insurance is dependent on where you live. Some states and counties differ and can have the both buyer and seller pay, but it is negotiable. In many areas, you can secure a discount for buying both policies from the same company. Whoever pays for the title insurance, however, gets to select the title company. (Just be wary of sellers who push for a certain company as they may be trying to hide something).
What to Look For in a Title Company
If you don’t know of a title company to reach out to, try asking your friends, realtor, or lender for recommendations. When in doubt, your lender should have your best interest at hand as they are the ones loaning you the money and want to be repaid. Do your homework on the title companies that were suggested and look for the following things:
- How many years of experience do they have?
- How many transactions have they done?
- Are they local?
- Do they have any complaints against them? (Check the Better Business Bureau)
- What kind of services are included, and what are the associated fees?
No matter the recommendations offered to you, it’s important to note that as the homebuyer, YOU have the right to choose your own title company.
With over 35 years in the business, we can assure you that Northern Title Company is experienced and can successfully help you with your needs when it comes to purchasing real estate– whether that’s closing escrow work, issuing title insurances, or performing title examinations. Let Northern Title, a locally-owned company, help you with your next real estate purchase. Contact us at one of our 14 offices today.