In most cases, you will need to choose a title company to work with for your home buying or selling plans early in the sales process. This information is often listed on the sales contract, and the sales contract and preliminary funds will need to be given to the title agent within a few days of executing the sales contract. However, many people who are new to the buying and selling process may wonder what a title company does and why their services are needed. The reality is that this is a third party vendor who has a number of critical functions in the process.
Reviewing Title History
Almost as soon as the title is opened with the title company, your title agent will run a search for title records pertaining to the property. This initial research will show all liens and claims on the property as well as their release. Ideally, all previous claims to the property will also be released, and if not, there is a title history issue that will need to be worked out before closing. The title company will use its research to prepare a preliminary title commitment, and this may be provided to the lender as part of the loan process.
Extending Title Insurance
Most lenders will require that you purchase a title insurance policy as a condition of closing, and the title company will prepare a title insurance policy on your behalf. Title insurance is crucial because it protects you from financial loss if there is a dispute or claim on the property later on. This type of issue ultimately could result in your loss of the property, which can be incredibly costly to endure. There may also be legal expenses, and these are covered by title insurance as well.
Assisting With the Closing
The final function that a title company plays in the buying and selling process is assisting with closing. Your closing agent will collect all invoices outstanding that are related to the transaction and will collect the funds from various parties. He or she will prepare a closing statement that shows where every penny is allocated, and the closing agent will disburse the funds as necessary after all parties have executive the closing documents. The closing agent will also prepare, notarize and file closing papers related to the transaction.
These are all critical functions in the buying and selling process, so you should make an effort to find the best title company possible to work with for your transaction.
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