Clear Title and Borrowing Against Your Home Equity

Clear title means that a person or company owns a house or another real estate and is clear of encumbrances. Also known as free and clear, good, just, and clean title, it refers to a state in which there are no claims to legal ownership. There is no levy or lien from financial institutions and no reason to dispute or make legal claims to ownership. This is a requirement when a person or business decides to sell real estate.

Benefits of a Clear Title

Many borrowers look forward to the time when they won’t be making loan payments for their home and vehicle. This means that their car or house is free and clear. There are no liens, loans, and mortgages and for this reason, such ownership is called a clear or good title. The person owns the property jointly or separately, and no one else has any legal claims to it.

He can sell it or rent it and do anything else. However, the tax authorities can repossess the property if the owner stops paying property taxes. Another problem is that some people own a house but not the land it is built on. For example, some people live in mobile homes that sit on a land they do not own. They are required to pay space rent, regardless of where they choose to reside. They risk being evicted if they fail to pay space rent. There are benefits to making monthly mortgage payments as well. One is that interest payments are deducted from the borrower’s annual income. The problem of having a home is that the owner is in a higher tax bracket. While persons who own a home pay higher property taxes, they don’t have mortgage payments to make on a monthly basis. It makes sense to take out a mortgage loan is some cases. The borrower no longer owns a clear title but can use the loan for home renovations and improvements. This will increase the value of the property and the chances of selling it quicker. It is important to invest wisely because the amount invested may exceed the difference in sales prices.

Factors Determining the Value of the Title

Note that the value of the title depends on market fluctuations. The situation is different with vehicles and other assets that decrease in value due to depreciation or amortization. The value of vehicles, for example, decreases based on wear and tear, mileage, use, and age. The only exception is classic and rare vehicles. The same is true for antiques and collectible items. Regardless of what the value is, a clear title is a requirement for different estate transactions. There are companies that check for liens and legal claims on behalf of clients. Apart from liens and encumbrances, there are other reasons to run a check. Two examples are building code violations and erroneous surveys. These are grounds to dispute legal ownership.

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