Many people fail to acknowledge the many steps required to purchase a home. Real estate transactions involve far more than touring a property, making an offer and closing on it.
For one, you will likely want a mortgage pre-approval before submitting an offer. Once you’ve signed a real estate contract for the home you’re buying, you will need to have it inspected to ensure it’s free from major defects. Furthermore, you must perform a title search on the property to make sure no barriers to your transaction exist.
What do title searches uncover?
To purchase a home, you must ensure it has a clean title. A title search will determine whether claims or issues exist that make it unsaleable.
While you can perform this search on your own, an attorney or a title company usually completes it. These professionals will know what to look for when evaluating the property’s title and going through public records. Their research may uncover problems that could prevent you from taking ownership of the property.
These problems include:
- Competing claims of ownership
- Mistakes in public records
- Restrictive covenants
- Outstanding liens
Why do title searches require insurance?
Before beginning your title search, you will want to secure title insurance on your property. Your mortgage lender will likely require you to purchase it since it protects them from any financial loss that title issues could cause. Keep in mind that standard title insurance will not protect you if your property’s title has defects. You have the option, though, to purchase owner’s title insurance, which will offer protection.
Title searches are a complex, confusing and necessary part of homebuying. Just because the process can be challenging should not dissuade homebuyers from completing their due diligence before they close.