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The title company conducts a title search which is a history of who has owned the property and details all prior transactions, existing liens and encumbrances or other factors that affect the title. You receive a Preliminary title Report on the property which covers all of these items.
The title company also provides title insurance which protects you and the lender against a cloud on title. There are two types of title policies:
1. The Lender's Policy - Protects the lender against loss due to unknown title
defects or other matters that affect title and are not known at the time of sale. This
policy is mandatory.
2. The Mortgagor's or Buyer's Policy - Protects the buyer from flaws in
the title. This policy is optional but is highly recommended
When your loan is approved and the loan documents are drawn up, they are sent to
the title company. Your escrow officer then prepares the papers for you and the
seller to sign. At this point, you will be told exactly how much money you will
need to bring n on the loan. You will also be required to provide any additional
documentation the lender needs. Once both you and the sellers have signed the
loan documents, they are returned to the lender who reviews them. If everything
is satisfactory, the lender then funds the loan. The title company records the note
and deed of trust and escrow is closed.
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