Buying a home is an incredible investment. Most homebuyers spend time searching for the perfect house, one they can envision in their futures.
One of the processes that helps you protect this investment is the title search.
A title company conducts a title search, and because it happens with little involvement from you, it’s something you probably haven’t heard much about.
But a transfer of property can’t take place without one. So here are the benefits of having a title search before you buy:
1. Uncover Property Liens
If a debt is unpaid, a creditor’s last resort is to take out a lien on property. Courts typically won’t grant a lien unless a significant effort has already been made to collect owed funds.
This can occur with real estate if a homeowner has missed several mortgage payments, or if a contractor has performed work on a house and not been paid.
Liens grant creditors a claim to assets, signal to the homeowner that significant action has been taken to gain missing funds, and are also a burden to the homeowner.
If you are interested in a house, you should have a title search to uncover any property liens. These would signify that the current homeowner owes payments to a mortgage company, contractor, or even the government in the case of unpaid taxes.
A real estate transaction cannot take place if there are existing liens. A title search helps you discover the existence of liens, and the current homeowner needs to settle them before a sale can take place.
In the unfortunate circumstance that a lien goes unnoticed, it’s important to know that the lien is attached to the property, not a person. So if you become the homeowner, you would then be responsible for paying off any liens on the property.
Thorough title searches can provide peace of mind that you are purchasing a property that is free of these sorts of financial issues.
2. Discover Issues with the Chain of Title
A chain of title is the historical record of every owner of a property. For real estate, these diligent records are usually stored in the town’s or county’s clerk’s office.
A title company looks at the chain of title to make sure the current homeowner truly has ownership of the property.
Though rare, fraudulent or even poorly written titles could cause issues when it comes to determining the property’s true owner.
You may have heard stories of long lost heirs, who resurface and suddenly claim cars, land, and houses that do technically belong to them. If this happened to you, you would be required to hand over your house at a complete financial and emotional loss.
Through a title search, a title company investigates the history of a property’s title to make sure every sale and title transfer has been without issue. No forgeries, no mistakes, no issues with the chain of title.
Again, this protects your investment in your house. Consider living there for years, creating a home, and then losing it. If you trust your title search to a reputable title company, you can finalize your purchase of the property with more assurance that this won’t happen.
3. Assist in the Mortgage Process
If you are like a lot of homebuyers, you can’t pay for your ideal property with cash. This means you have to use a mortgage company or lender. And the process for mortgage approval can be time consuming and stressful.
One of the ways you can ease this process with your lender is to show that the property has a clear title.
Remember, the lender is also making an investment in the property. Just as you would be concerned with hidden lien or chain of title issues, the lender is as well.
Using a reputable title company to conduct a title search and find a clear title helps you go through the mortgage approval process.
Of course, your mortgage company will require that you get lender’s title insurance. This is another service offered by title companies, and protects investment in a property in case of any undiscovered issues with the title.
You also have the option to get owner’s title insurance. So even if you receive affirmation of clear title, you can still protect your investment. In the case of a lien or issue with the chain of title, the title company covers any financial losses.
New Door Property Transfer completes title work for homebuyers. For more information on title searches and title insurance, visit New Door today.