What Is a Lien and How Can It Affect Your Home Ownership?
When buying a home there is so much paperwork that needs to be filled out and approvals that need to be obtained that it can be easy to overlook important details. One of the more commonly forgotten details is whether a property’s title has a lien on it. If you aren’t sure what a lien is or how it can affect your homeownership, AREA Title Agency, Inc. has the following post for you.
What Is a Lien?
Each time that you apply for a line of credit, the assessor considers how likely you are to repay monies owed in full and with interest. The higher the amount, the more skeptical a lender needs to be. When the amount reaches a certain level, lenders will require some type of security. This security needs to be a tangible item that, if sold at auction, would recover any and all monies owed. In many cases, the item selected by both the lender and the applicant is the title of their home. With this, the title owner agrees that, should they cease making repayments, the title of their home can be sold. Once this agreement is in place, an official record and note is placed against the records of the home’s title. This is called a lien.
How Can It Affect My Home Ownership?
Continuing with the example above, imagine that you were to purchase the property involved. However, shortly after the transfer is complete and money has changed hands, they decide to stop making their payment obligations to their lender. When this happens, the lender is going to invoke any rights they have to recovery action, which includes selling your home to recover their losses and fees. That’s right – even though you are the new homeowner, a lender can still foreclose your home to recover a previous owner’s debts.
Protect Yourself with Title Insurance in Toledo, OH
To protect yourself from a situation such as this, speak with AREA Title Agency, Inc. at 419 242 5485 to learn about how title insurance in Toledo OH can provide you with a thorough report of the history of your title including any liens along with financial protection against claims made against the ownership of your investment and home.