What is the role of a title company in a mortgage transaction?

In a mortgage transaction, the title company's primary role is to ensure that the property title is clear. This involves conducting thorough research to confirm that the title is free from liens, claims, or other encumbrances that could affect ownership. A clear title is essential because it guarantees that the buyer will have full ownership rights to the property without future disputes over ownership. Additionally, the title company prepares the necessary documents for closing and facilitates the transaction between the buyer, seller, and lender.

While negotiating interest rates is a function typically associated with loan officers or lenders, and providing insurance on the mortgage loan is related to mortgage insurance rather than title insurance, the title company's focus remains firmly on the integrity of the property title. Financial underwriting is generally the responsibility of lenders to assess a borrower’s financial qualifications, separate from the title company's duties.