You’ve found your dream home and are eager to close the deal. However, there are many steps you need to follow before you can complete the transaction. One of these steps is a title search. Is a title search necessary when buying a home? Can you skip it and go right to the signing?
You may not need a title search to transfer the title, but it might be a requirement for other reasons. Title searches also have other benefits that can be valuable to buyers. This post will cover why a title search is necessary for buying a home.
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A title search examines public records associated with a property’s title. It will look into past deeds, the chain of title, and potential liens. A title search will also confirm the information on the title. The purpose is to ensure it is a clear title with no defects.
Now that you know the basics of a title search, let’s consider why it may be necessary.
Most of us borrow money to buy our homes. Under a traditional mortgage, the property is security for the loan. Lenders require a title search to ensure the title is clear for transfer and has no issues. It is a measure to protect the money they invest in the loan. Unless you are paying without borrowing, it is unlikely you’ll find financing that does not require a title search.
You might think determining the owner of a property is simple. It should be the name on the title. While it usually is that straightforward, it isn’t always the case. There could be a person with an unknown claim to the property. You might not expect fraud to be an issue, but it can’t be counted out, and a title search will discover it.
Some titles may have issues other than ownership. For example, there could be liens against the property or unpaid taxes. A boundary dispute might cover a significant portion of the land. Typographical errors or missing information on the title can also be problems.
A title search is also a requirement to obtain title insurance. Buyers usually need title insurance for the lender, but owner’s title insurance can also be valuable. Title insurance protects against undiscovered issues that may come up after the purchase.
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