As you move through the home-buying process, you’ll hear two terms used frequently by your real estate agent and your lender: “title” and “escrow.” Whether you’re a first-time or seasoned homebuyer, these two words often cause confusion. In this post, we’ll clarify what each means and what you should know about title and escrow.

How Escrow Affects You

Escrow has several meanings, but when you buy a home, a portion of your money is in limbo while you move through the different phases of buying a home. When you make an offer on a house, you write a check for earnest money. Earnest money is held by a third party, in an account where neither you nor the seller can access it. Your money is in escrow.

Escrow protects both parties involved in a real estate transaction. It protects both parties is by ensuring each receives what they’re supposed to at the end of the transaction, which is the closing. The seller receives payment for the home. The buyer receives the keys, and even more importantly, the signed deed to the home.

How the Title Fits into the Transaction

When buying a home, the title pertains to the legal right of a person to own, use, and transfer ownership of a piece of real estate. The title is always a concern for the buyer, because if the seller doesn’t legally hold the title to the home, it can create all kinds of problems. Title issues can delay closings. They also prevent the transaction from going through altogether.

The Title Search

One major part of any real estate transaction is the property title search. Since a clean title is required for the transaction to go through, the title search is necessary. A title search examines public records to verify that the seller is the legal owner of the property. It also reveals any liens or claims on the property. Legal documents are also scrutinized to find any errors or inconsistencies that could affect the transfer of ownership.

The New Homeowner and Title

After the title company performs the title search, the buyer receives a preliminary title report. Finding issues on the report doesn’t necessarily mean you won’t close. It does, however, mean those issues must be discussed with the seller, and measures must be taken to correct them. Assuming any issues are handled, you’ll close on the home, and in a few weeks, you’ll receive the deed to your home. The deed proves you have title in your new home.

Man reviewing paperwork near house model, calculator, and keys

How to Protect Your Title

Most new homeowners get the keys, move their belongings in, and begin creating a happy home. They’re not aware of a growing problem in the U.S. called property fraud. This is also referred to as deed fraud and house-stealing. Fraud, in this case, occurs when a person steals a homeowner’s identity and then illegally transfers the property into their name. You do have options when it comes to property title protection for your home.

One way we help homebuyers protect their ownership rights is through property title monitoring. It’s a service designed to trigger alerts when we notice suspicious activity against the deed on your home. Talk with one of our experienced team members here at Secure Title Lock to find out how title protection works. Call today at (801) 225-2888.