What Does a Title Company Do?

People buy and sell houses all the time. Yet how many of those people understand what the title is and what a title insurance company does? Titles are a big part of buying or selling a home. Here’s what you should know.

Title Company Basics

A title insurance company is an independent company — with no connection to your mortgage lender, real estate agent, buyer, or seller — that ensures the transfer of title ownership from the seller to the buyer. These companies search for the proper title to a house, conduct property surveys, oversee closings, extend title insurance, and hold escrow funds. Title companies typically charge around $1,000 for their services.

What a Title Company Does

A title company ensures no issues prevent the buyer from becoming the legal owner of the home. Examples of “issues” include potential heirs, unpaid taxes, previous mortgages, liens, fraud, and more. Title companies also offer title insurance.

What Title Insurance Covers

Title insurance is just like it sounds, it protects the buyer against any future claims against the property. There are two types of title insurance, and both cost about $1,000 each.

• Lender title insurance. This is required by mortgage companies. It protects the lender against anything title-related that might impact the payment of the mortgage.
• Owner title insurance. This is not typically required but protects the owner against any title-related issues.

Do One Thing: If buying a home, consider whether you should purchase both types of title insurance. It can be a relatively inexpensive price to pay to cover yourself against issues with owning your home.

Original article by Chris O'Shea and adapted in partnership with SavvyMoney.