Colony Title Associates

Home Title Insurance 101: What You Need to Know

Title companies handle all of the complexities your home purchase and explain the process for you in simpler terms. They deal with the mounds of paperwork and then, for a fee, issue you title insurance for a property. This insurance provides a legal defense to the status of your title to the property. When you take the leap to buy a home, and finance the purchase, you will need to work with a title company. In addition to providing title insurance, a title company maintains an escrow account for the deposit of purchase money and lender financing, and makes sure that the lender’s instructions are followed and that funds are disbursed to the proper parties.

What is title insurance and why do you need it?

In addition to the benefit of having legal rights to a property, you need title insurance to resolve disputes or claims, over title to the property. While you may think dealing with this would be a nightmare, title insurance will resolve it quickly and efficiently. There are two kinds of title policies: owner’s insurance and lender’s insurance. Lender’s title insurance protects the bank or mortgage company that is lending you funds to purchase the property. You will be required to pay for the lender’s title insurance policy as part of your closing costs. In Maryland, a buyer has the option to purchase and owner’s title insurance in addition to the lender’s policy. Typically, this does not add much more cost as you are already paying for a lender’s policy. Before Colony Title will issue your insurance, we will present you with a Title Insurance Commitment, which is a summation of what was found during a title search. This process helps to verify that you will be the rightful owner to the property and inform you as to any possible issues that may exist upon the property.

Your title must be valid.

A title company will perform a verification process to ensure that the property is free of liens or other encumbrances that may affect the enjoyment of your property, so that you will have no problem confidently purchasing your new home. The title company will conduct a title search in the Land Records of the county where the property is situated. This means that a professional “title abstractor” will complete a thorough investigation of the trail of property documents attributed to the house or property. In addition, you will be required by the lender to purchase a location survey, and the title company may require or recommend a more extensive survey. Your title company will then examine these documents to determine who rightfully owns the property and if there are any part-owners as well. Outstanding mortgages, liens, or unpaid taxes associated with the home will also pop up in the search, as well as easements and right of way agreements in favor of utilities and other entities or individuals. Past disputes or issues regarding the property will also be discovered in the search. Any of this documentation could affect your desire to own the house. Do you remember that big backyard you played in as a kid? Well, your parents may have only owned the land to a certain point in that giant green lawn. They may have had to maintain the backyard, but may not have owned all that appeared to be part of your yard. Your title company will find out this information and report it to you, so you can still keep that dream of cultivating a garden.

Pick the best title company for you.

Although we at Colony Title are biased that we are the best in the business, it is recommended that you ask your real estate agent or your lender for title company references. Make sure the company you are considering has plenty of years of experience; look up reviews on sites like the BBB or Yelp. Ask if they are a member of the Maryland Land Title Association. Make sure that you can inspect a title insurance commitment ahead of closing and that you will receive an owner’s title insurance policy with as few exceptions and exclusions as possible. Talking to your title company representative will help calm your nerves through the process.

Choose title insurance with Colony Title Associates.

Colony Title has been in business since 1995 and handles over 2,000 real estate closings per year. We are qualified to aid you with your title insurance and escrow process. If you have any questions or would like to speak to a representative about purchasing title insurance, please give us a call at 410-884-1160 or visit our website for more information.

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