Getting ready to buy a home can be a confusing time. From securing financing to going through the process of escrow, we understand there is a lot to do, and many moving parts to keep track of.
In real estate, mortgage and title companies play key roles in insuring home loans, and although we carry out very different functions, one can’t operate without the other. Before you wade into the home-loan market, True Concept Title explains the difference between title and mortgage companies & why both are key to buying property:
The Risk of Homebuying
Both title and mortgage companies must work together. Without the services of title companies, mortgage loans would be much riskier for both parties involved. If you were to buy a house without knowing about a claim or lien on the property, you would risk taking on much more debt than you were bargaining for and even litigation over ownership.
All while, the lender could risk default on the loan as well as costly fees incurred by any legal action over the title, property taxes, etc. Title insurance repays the FULL amount of the mortgage if the borrower loses the title to the property, and it also indemnifies the homeowner for the market value of the property.
Home Loans and Mortgage Companies
A mortgage is a loan that you secure to buy a property or a home, and the mortgage company works to create these loans by screening applicants and obtaining financing from banks and other financial institutions to cover the loan.
The mortgage company will run a credit report on the prospective buyer and offers loans with interest rates and terms that are acceptable to both the lender and the borrower. In return, the mortgage company earns a fee or commission from the lender based on the value of the loan.
Types of Mortgage Companies
There are four types of mortgage companies that you might work with to secure a home loan:
- Banks: This is great if you prefer all your financial accounts in one place. But, it could take longer to close your loan. They also may not offer government-backed loans like FHA, VA, or USDA home loans.
- Credit unions: Credit unions generally offer loans to their members only. They might offer lower costs and interest rates, but like banks, they might take longer to close, and they also may not offer government-backed loans.
- Mortgage lenders: Mortgage lenders exist for the sole purpose of helping people secure real estate loans. Most mortgage lenders can take care of the entire mortgage process “in-house” which can shorten the time frame involved in obtaining a mortgage.
- Mortgage brokers: Mortgage brokers do not lend money directly, instead, they have access to make lenders and loan programs, which can give you more access to many mortgage options. Because of this, they don’t have much control over the speed of loan approval.
A title insurance company, like True Concept Title, insures the legal title of the home you are buying.
The title company carries out title searches that identify the property’s past ownership and also discovers any outstanding title issues, liens, court judgments, or disputes that could stand in the way of you securing and buying your dream home.
The title company will then certify that the title is clear and provide insurance to the lender and the buyer. Your lender has a financial interest in the property, so the title insurance protects them in the same way it protects you: financially and legally.
Generally, the seller of the home pays for the title insurance policy, and you pay for the lender’s policy. You only have to pay title insurance once you close on the property, and you’re covered for as long as you own the home.
Dealing with a lien, probate, or other title dispute? As a national provider of a full range of title and escrow services, True Concept Title can help! Call our national title company today at 813-263-7168.
You’re buying a home. See the Steps in the Title Process
Title Companies and Escrow
During the process of purchasing your home, a title company will hold and manage money in escrow. This escrow account is a savings account that is managed by a third party – in this case, the title company – and will distribute payouts when certain conditions are met.
Escrow accounts are common in real estate transactions, as your mortgage lender wants to make sure that you have enough money to cover certain expenses. If your lender requires a certain number of months’ worth of expenses in escrow, the title company will manage this account on the behalf of you and the lender.
Confused about escrow? Read this: Explaining Escrow
Protect the biggest investment of your life with True Concept Title! Serving all 50 states, we manage and coordinate order entry, escrow, funding, and disbursement for all loan types!
Protect Your Investment with True Concept Title
While buying a home may feel daunting, our title agents want you to feel comfortable throughout the entire process of your real estate purchase. Our experts help you have the confidence to buy a home while interest rates are still low!
Choose True Concept Title for all of your real estate closing needs. We support the home buying process with superior title insurance, escrow services, payoff ordering, and more! With offices based on both the East and West Coasts, you can reach our national title experts anytime. Your dream home is waiting for you! Call 813-263-7168 to speak with a title specialist.