The title company handles the process of ordering a title commitment and lien search on the specific property that is being financed and making sure it is free of all liens, defects and problems. A lien search is done on the property to insure the property is clear of all liens for the lender that will be lending the money on the property. Whether you are doing a refinance or a purchase a lien search will most likely be done. Consult your local mortgage broker to find a good title company to use.

The title company is an unbiased 3rd party that protects the interests of both the homebuyer (or borrower) and the lender. The title company will perform a thorough search of the property's history to make sure there are no breaks in the chain of title. In other words, the title company will link sellers and buyers from the beginning of time (theoretically) to present day. This linking of sellers to buyers is why it is called a "chain" of title. If there is a missing link in that chain, the title company will inform all parties of what needs to be done to fix the missing link. Once all links are in place and all olds liens are released, they will issue a policy to the new homeowner insuring that they have marketable title to the real estate. They also insure that the mortgage lender has a valid lien on the real property in the form of a mortgage.

Title insurance policy - A contract in which an insurer, usually a title insurance company, agrees to pay the insured party a specific amount for any loss caused by defects of title on real estate in which the insured has an interest as purchaser, mortgagee, or otherwise.

Title Insurance is a policy which insures a property owner should a prior claim arise against the property after the purchase has been completed. Title insurance will also cover the lender should a question of ownership arise. When you are completing a refinance transaction many times you may be able to get issued a reissue rate (a discounted rate) on your title insurance if you have the original title policy from when you purchased the home. Ask your mortgage consultant or title agent about this to see if you may qualify.

There are two parts to every Title Insurance policy, a lender's policy and a owner's policy. The two policies are usually purchased together. Home buyers get a discounted rate when these two policies are issued simultaneously.

For such a cheap dollar amount this insurance is worth purchasing since it protects you and your property should anything arise!

The title company handles the title insurance fee and the calculations of how much the fee is, based on their title insurance provider. The title insurance provider is actually the one that provides the insurance, not the title company.

Protects you up to a certain amount against any loss coming from a claim against your property, due to a mistake in the title. A lender's title policy does not protect you. Your coverage may be bought to protect your equity in the property.

When refinancing your home it is actually the homeowner that pays for the lenders title insurance policy.

Title insurance protects both the lender and the bank in case of a "cloud" on the title.

When you purchase a property, there is title insurance for both the lender and you as a new owner.

Title Insurance protects the current owner or buyer of a property from defects in title. In a purchase transaction this is usually paid for by the seller. Lenders usually require this on all real estate financing transactions.

When purchasing a home the seller and buyer negotiate who is paying the charges for the title insurance policy. Often the fees are split in half. However it is the seller (in California) who determins which title company to use.

Escrow - Escrow can mean a couple of things. Escrow is the holding of money by a neutral third party for individuals involved in a business transaction. For example, when you place a bid on a home to purchase you will normally provide an earnest money deposit to show your good faith and interest in the property. This money will be held in escrow by a third party, usually a title company or attorney until the transaction is complete.

If you refinance your home your new lender will be required to establish their own escrow for taxes and insurance, since the property taxes and insurance premium are now their responsibility. When your old mortgage is paid off you will receive a refund check for the current balance of your escrow account. This ensures that you are not being charged twice for your property taxes, or hazard insurance.

Escrow instructions must be followed exactly.

If you decide to escrow your property taxes and home owners insurance you should be prepared to have higher closing costs. The escrow account will require an initial deposit so that when added to the monthly payments the account will have enough funds to pay the taxes and insurance when they are due.

Escrow can also refer to an account that is set up at the time a mortgage is created. This account holds an initial balance, and is added to on a monthly basis. The additional funds to the account are included in the borrowers mortgage payment. The escrow account will be used to pay future property tax installments, as well as future hazard insurance premiums.

When you do decide to escrow, you need to realize that the lender will take a couple of months extra payments for reserves. This is in case your property taxes increase, the money will be there when it is time for you to pay your property taxes.

Example: If you purchase your home in March, most lenders will collect 5 months worth of escrow from you. You will get a credit for the months that you were not living in the house.