Title insurance protects the buyer (mortgagor) and or the loan company (mortgagee). Can the current owner give a clear free marketable title to the would be purchaser? If a dispute arises regarding prior ownership. Ex spouses, siblings, and perhaps Native Americans (Indigenous Peoples such as the Lenni Lenape ) returning to claim their share, They may come to attempt to collect from the current holder of the property. During the home buying process a person customarily does a title search and purchases title insurance.
During a title search the property a search of public records is conducted. Any registered liens (encumbrances), conveyances, deeds, mortgages, easements, and lawsuits (such as divorce) should surface. An abstract of title, a title report, a binder (title insurance, commitment) stating exceptions which state any known defects which are not covered is generated, which indicates the pedigree, the chain of ownership of the property.
Any encumbrances, clouds or defects on the title which interferes with the mortgagee recouping their equity will be required to be satisfied prior to a loan company giving a loan that will support the purchase of the property. This must happen prior to or even at the closing event. Example: plumbers, contractors, previous loans, special assessments …. The mortgagee or lender's policy protects the lender. The perspective buyer will be required to purchase if they wish the company to give them the loan. The buyers (mortgagor) policy which protects the buyer is optional.
Depending what state, (real estate laws are primarily state laws) the coordination of the closing could be the: To presides? Title company: In some cases, the title company verifying the legitimacy of the seller’s clear ownership of the property which may have also served as the escrow agent for the real estate transaction might host the closing.
Lender: Some states closings are held at the office of the mortgage lender. Escrow company: Some hire an employee of the escrow company which was responsible for the safe keeping of the transaction funds.
Real estate attorney: Requirement of some states is that a real estate attorney be present at the closing. The lawyer would facilatate and coordinate the entire proceedure. Perhaps they might prepare specific documents. In New Jersey, your settlement agent will be either a title officer or attorney.
Who might attend closing? The buyer, the seller, buyer's agent, seller's agent, Title company, Real estate attorney, mortgage lender.
The pandemic has created a new option. Video meetings. Participates may be in different locations.
Cost: Aproxmately $1000 plus. The plus depends upon details and location. 0.4% to 0.5% of the purchase price.
Shop for title insurance as you would shop for any insurance. Recieve multiple quotes.
Shop for price and compare services that are listed on section C of page 2 of your Loan Estimate
