When you’re closing on a home you’re already expecting mountains of paperwork, confusing contracts that will be presented in legal jargon, and a lot of people asking you to sign things. Some of these people may have titles and work for companies you have never heard of, and that is where closings can get a bit nerve wracking.
The good news is you’ll have people at your closing who are there to explain what each document is, and why it is important. What may not be clear are the people who have similar job titles, why they work at different companies, and why you need all of them. One example of this is the underwriters.
You’ll be hearing about the “underwriter” multiple times, but you’ll see different peoples’ names next to the job title. That’s because there are two people involved. One will be underwriting your title insurance policy, and the other will be underwriting your loan from a bank or financial institution. Both work closely with the title company, but they do very different things.
The two types of underwriters you’ll hear about when closing are:
- The financial underwriter – this is the person who will authorize or decline your ability to take out and get approved for a loan. They review the risk the financial institution will take on by lending you money.
- The title underwriter – this underwriter will examine the title and check for possible issues that could arise during and after you get the title for the house, building or property. If they feel the title will clear and you can take control, they’ll be able to approve you for a title insurance policy.
Both of the underwriters work independently of each other, but each play a vital role in a real estate transaction.
First you’ll be hearing from the financial underwriter. They’ll be looking into your credit history, how much you have in the bank, and all the things which impact you financially from car loans to student debt, and even your employment status.
Once cleared, and you have negotiated on a price to buy a property or home, you’ll select a title, escrow and closing company. Many times, the title company will be able to handle the escrow and closing as well. If you opt in to buying a title insurance policy, this is when you’ll come into contact with the title insurance underwriter.
Their job is to look at the total risk in writing a title insurance policy to help protect you in case someone lays claim to your home after you close. But it is also important to remember that they work for the title insurance company, not for you.
Their job is to protect the title company, by also making sure the title you are going to receive is as clean as possible. If you don’t have any issues arise, the title company is safe too. Because of this, if they are open to writing a policy, it can be an extra peace-of-mind that there is less of a risk for someone making a claim on your home.
Although both of the underwriters will be thrown around synonymously, they both play an important, but different role. If you have any questions about the underwriters and your closing, one of our trained staffed members will be happy to assist you. Simply call us at the number on the top of the page, or email us at firstname.lastname@example.org.