Now that you have decided to buy a home, what happens between now and the time you can become the legal owner?
First, your loan application will have to be approved. In doing this the lender will include a credit check on you and require an appraisal and survey of the property. Legal papers will be prepared for you (and the seller) to sign. This will include a new deed, note and mortgage. The title to the property will be checked to determine what debts are owed against the property and who is the legal owner.
Finally, when all things are in order, the settlement ("closing") will take place. The seller will sign the new deed to you and you will sign a new note and mortgage. The old loan on the property will be paid off and the new loan set up. The seller, realtor, attorneys, title company and other performing services for you will be paid. Title insurance policies will then be issued to you and your lender.
What Title Companies Do
"Six Steps in Transferring a Land Title" (see diagram above) describes what title companies do. For the sake of simplicity, these are all shown as occurring within the walls of a title company, as indeed happens in certain areas. However, in different parts of the country some of these functions are performed by attorneys, lenders, escrow companies and other persons, while the title company issues its title insurance policy.
Title companies and their agents, search, examine, close and insure land titles. Title insurance policies are issued to the homeowner and the lender, assuring them financial protection against adverse title claims or risks. Equally important, potential title claims that surface in the process of insuring a title can be resolved by the parties prior to closing their transaction.
1. Order Is Taken An "escrow contract" (agreement to close) starts the process. 2. Tax Check What taxes are owed on the property? The various assessor-collectors are contacted. 3. Title Search Public Records, deeds, notes, paving assessments, liens, wills, divorce settlements, etc. 4. Examination Verification of the legal owner and debts owed. 5. Typing Forms are prepared for settlement. 6. Settlement Escrow officer oversees closing of transaction; seller signs deed, buyer signs new mortgage. Old loan is paid off, new loan is set up. Sellers, realtors, attorneys, title company and others are paid.
