Understanding the Title Search Process

by Joe Taylor Jr.
CMR Columnist

The closing costs involved in buying a house and securing a mortgage will tack several thousand dollars onto the cost of your transaction. The title search, a necessary part of the home-buying process, will ensure that your new home's history won't surprise you with higher home mortgage costs.

Land and houses can change hands many times over the years. If you purchase real estate in an older neighborhood, it's possible that a financial hold, a lien or an unpaid tax bill, has been placed on your house somewhere along the way. Those charges must be cleared up before you can take ownership.

Title Searches Prevent Unexpected Mortgage Delays

Even sellers operating in good faith can be unaware of liens that could prevent you from securing a mortgage. Clerical errors like misapplied payments or misfiled paperwork could be the cause, but the result will be the same: mortgage lenders cannot approve your home mortgage without assurance of a clear title.

Therefore, all mortgage brokers require you to complete a title search before underwriting your home mortgage. For a cost that's usually about 1% of the value of the property, title companies will do the title search, examine the title, and issue insurance that protects both you and your mortgage lender from future mistakes.

What Happens During a Title Search

A title search can require these steps:
  • Establishing the history of owners
  • Searching for outstanding tax bills against the house
  • Inspecting and verifying the property and building dimensions
  • Checking for outstanding liens against the property
A home mortgage is a huge financial commitment. The title search will make sure that the house's hidden debts won't be part of your financial future.

Sources
Chicago Title
Federal Citizen Information Center
Interest.com

About the Author
Joe Taylor Jr. coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.

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