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Let's Talk Title: Your Home Loan and Title Insurance
Karen Lawson
CMR Columnist
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If you've ever bought a car, you're probably familiar with the concept of a title. When you pay off your car loan, you receive a title document showing that you have clear title to your car. But what about the title to your home?
My Mortgage Papers Say I'm the Homeowner, but Is That True?
Yes, you hold title to your property. However, the title to your property is held subject to your mortgage(s) and other encumbrances, such as unpaid property taxes. You can protect the title to your property by paying mortgage loan payments and property taxes promptly. Other types of liens include unpaid assessments, or liens for non-payment of home repair or installation services.
What Are Liens and How Do They Impact My Home Loan?
A lien is a publicly recorded encumbrance against the title to your property. If your property has liens against it, they must be paid before title to the property can be transferred. Mortgage loans are recorded against the title to real property. Your lender will require a title search to ensure that there are no liens against the property before your mortgage loan is recorded.
When your offer to purchase your home is accepted, an escrow is opened. During the escrow period, a title insurance company conducts a search of public records associated with the property you're buying. This search determines if there are any outstanding liens or other issues affecting your property. The title insurance company will issue a title report showing all recorded liens and judgments, and will address any issues affecting title to your property. Once title is clear, a policy of title insurance is issued. Title insurance protects you and your mortgage lender from unwarranted claims against your property.
About the Author
Karen Lawson has more than fifteen years experience in mortgage banking. She earned an MA in English from the University of Nevada, Reno.
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