When a person applies for a loan to finance real estate, the bank will charge a certain amount of interest. In addition to the interest, the bank will require the individual to sign a mortgage. In case he or she fails to repay the loan as agreed, the bank will foreclose on the mortgage and obtain full ownership of the real estate. Sometimes the debtor may choose to refinance the mortgage in order to borrow more or reduce the interest rates. In such cases, the bank may require the help of a title company to do the refinancing process.
The title company helps the bank to do some background check on the title of the property. The company will scrutinize all the documents associated with the property to assure the bank that the applicant is the legitimate owner. The title company will also establish whether the property has any problem. Some of the problems may include outstanding mortgages, liens, unpaid taxes and judgments. The bank will also know if there has been changes on the title since the time of initial mortgage.
In case the borrower wants additional funds from the refinancing, the lender liaises with the title loan company to disburse the money. In this case, the lender will have to deliver the money to the title company and give it the right of ownership. The company will then handle the disbursement and any other additional procedure that might be necessary. The title company will deduct its fee before delivering the money to the borrower and any other parties entitled to payment. After disbursement, the title company will give the bank a new title search in order to verify the mortgage lien on the property.
A title company acts as a communication platform for all the parties involved in the refinancing process. An agent from the company can contact lenders to establish the exact amount used to pay off the original mortgage. The agent keeps in touch with the owner of the property, government, surveyors and lawyers who are linked with the refinancing. The title company also gathers and organizes all the documents needed for refinancing.
A title company can also facilitate the closing process. Closing occurs when the borrower signs the documents associated with the loan. Once the meeting adjourns, the closing agent makes arrangements to ensure the client gets the money as agreed. The title company’s agent must come up with a settlement statement that captures all the bills to be paid from the proceeds of the loan. The statement also captures the amount that will be paid to the borrower as disbursements. The agent then ensures that the borrower signs the statement and all the refinancing documents. In most occasions, the agent is the one tasked with delivering the closing documents to the county records office.