Your Path to Ownership: From Accepted Offer to New Home
Now that you’ve decided to purchase a specific home, what’s the path from this point to legal ownership?
Formal Loan Application
Upon identifying a specific property, your lender will secure a formal appraisal, and sometimes a survey.
Tax Assessment
What taxes are due on the property? The Closing Attorney will reach out to the relevant assessor-collectors for this information.
Conducting a Title Search
This process involves gathering copies of public records such as deeds and assessments. It also addresses matters of probate, heirship, divorce, and bankruptcy.
Verification Process
This step ensures verification of the legal owner and any debts owed.
Document Preparation
The necessary forms for conveyance and settlement are prepared.
Settlement
A Closing Attorney supervises the transaction’s closure. Here, the seller signs the deed, and you sign a new mortgage (via a Security Deed). Any existing loans of the seller are paid off, and the new loan is established. The Seller, agents, escrow, surveyors, Title Company, and other service providers involved are paid. Title insurance policies are then issued to you and your lender. The transaction is subsequently recorded in the Public Records, typically kept at the local courthouse.
Understanding Title Insurance
There are two types of title insurance:
- Lender’s Title Insurance: Protects the lender for the mortgage amount.
- Owner’s Title Insurance: Protects your equity in the property.
While your lender will require you to pay for Lender’s Title Insurance, Owner’s Title Insurance is optional. However, it’s a grave mistake not to adequately insure your interest.
Title agents search public records to identify past owners of a property. However, these records may not always reveal irregularities. For example, an unauthorized seller could forge the property deed, an unknown but rightful heir could appear after the sale, disputes could arise over a deceased owner’s will, or a land survey might indicate incorrect property boundaries.
For a one-time payment at closing, Owner’s Title Insurance offers protection against problems, including those that extensive searches may not disclose. This coverage lasts as long as you own the property, regardless of subsequent financing.