Hey there, future homeowner! Navigating the mortgage process can be complex, but don’t worry—I’m here to guide you through it. This week, we’re delving into a crucial aspect of buying a home: abstracting and title. These terms might sound intimidating, but by the end of this post, you’ll have a clear understanding of what they mean and why they are important. Or you can hit the easy button and just watch the video above. 😉
What is Abstracting?
Abstracting involves uncovering the history of the property you’re interested in by examining public records. This process verifies the property’s ownership, checks for any liens or claims against it, and gathers other pertinent information. Think of it as peeling back the layers of the property’s past to reveal any potential issues that could affect your ownership in the future.
An abstract begins at statehood with the initial grant deed and includes every instance where the property title changed hands. The length of an abstract depends on how many times the property has changed ownership, but it usually contains a comprehensive history.
Why is Abstracting Important?
Knowing the history of the property helps ensure there are no surprises down the road. For example, you wouldn’t want to discover after buying your dream home that there’s a tax lien on it from a previous owner. Understanding the property’s past gives you peace of mind and ensures a smooth ownership experience.
Understanding Title
In simple terms, title refers to the legal ownership of the property. When you buy a home, you want to be certain that the seller has the legal right to sell it to you and that once you own it, no one else can claim it as theirs.
Ensuring a Clear Title
To ensure a clear title, title insurance comes into play. Title insurance is like a safety net that protects you against any issues with the title that may arise in the future, such as undisclosed heirs, forged documents, or errors in public records. Title insurance will be part of your title package, providing essential protection.
The Mortgage Process: Abstracting and Title
Here’s how abstracting and title work in the mortgage process:
- Title Request: Ordering title is the first step when we begin processing your loan file. As soon as disclosures are signed, we send out the title request.
- Abstracting: The title company orders the abstract and brings it up to date since the last transaction. This step takes the longest, but during this time, the title company looks up records for items like back taxes, liens, encumbrances, conveyances, and any legal actions involving the property.
- Collaboration: We work closely with the title company, sharing documents and findings to ensure a clear title and a hassle-free closing. Frequent updates between us and the title company ensure all potential issues are addressed.
- Attorney Review: Once the abstracting and research are completed, the title attorney reviews the property history to ensure your ownership is uncontested and legally sound. The attorney looks for any legal issues, outstanding liens, creditor issues, encumbrances, and unresolved code issues.
- Title Package Completion: After the attorney’s review, the title company completes the title package, which includes:
- Title commitment and associated endorsements
- Chain of title
- Legal description
- Property tax information
- Closing Protection Letter (CPL)
- Wire instructions
- Title Closing Disclosure (CD)
We review this package and send it to the underwriter to ensure it meets all loan criteria.
Conclusion
When buying a home, abstracting and title work hand in hand to provide peace of mind. Abstracting helps us uncover potential issues with the property’s history, while title insurance protects you against unforeseen challenges to your ownership rights in the future. Title work is part of the transaction from the initial processing step all the way to the closing.
As a homebuyer, navigating the mortgage process can feel overwhelming, but remember, you’re not alone. Your mortgage dream team is here to simplify things, answer your questions, and guide you every step of the way.
Ready to embark on the exciting journey of homeownership? Contact our team today, and let’s make your dream home a reality.
Next Week: All About the Appraisal
Stay tuned for next week’s post where we’ll discuss the appraisal process, its importance, and what to expect. We’ll cover the inspection and report, as well as various “what if” scenarios so you’ll be confident and ready when your appraisal report is in your hands.
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