Category Seniors Real Estate Specialist

What is an Encumbrance in Real Estate?

An Encumbrance is any claim against an asset by an entity that is not the owner. For example; liens, easements, leases, mortgages, or restrictive covenants. Encumbrances impact the transferability and/or use of subjected properties. Not all of these encumbrances will prevent a property from going under contract. Easements often transfer with the property during a sale, however, if the easement has not been recorded properly, this can cause disputes during sales. Mortgages do not prevent the sale of property as they are dealt with during the transaction by the title company and the mortgage lender to make sure any pending mortgage is paid in full at closing, but if a seller is delinquent on their mortgage, this will prevent the sale of the property until any back debt is resolved.

Liens against a property will cause big issues during the selling process. Any future buyer does not want to have problems from debt collectors or lien holders after the sale. Therefore, the title company will flag any liens against the property and those debts must be satisfied before the sale can be finalized.

An Encumbrance is any claim against an asset by an entity that is not the owner. For example; liens, easements, leases, mortgages, or restrictive covenants. Encumbrances impact the transferability and/or use of subjected properties. Not all of these encumbrances will prevent a property from going under contract. Easements often transfer with the property during a sale, however, if the easement has not been recorded properly, this can cause disputes during sales. Mortgages do not prevent the sale of property as they are dealt with during the transaction by the title company and the mortgage lender to make sure any pending mortgage is paid in full at closing, but if a seller is delinquent on their mortgage, this will prevent the sale of the property until any back debt is resolved.

Liens against a property will cause big issues during the selling process. Any future buyer does not want to have problems from debt collectors or lien holders after the sale. Therefore, the title company will flag any liens against the property and those debts must be satisfied before the sale can be finalized.

Are you in the market to purchase a property in Southern Arizona? Of course, there are many things to consider before you even start seriously looking. Do you have financing in place? Many real estate agents will not even consider showing houses unless the potential buyer has a pre-qualification letter from a lender. And some won’t unless the buyer has a pre-approval letter.

What is the difference between a prequal and a pre-approval?

Prequalification From a Lender Means…

A prequalification letter simply means that you have discussed your plans to purchase a home with a lender and the lender has given you a ballpark price that you MAY qualify for. This is not a concrete dollar amount and often the Pre-Approval will vary from the guestimate of a prequal. A prequal is only based on your income and major bills to arrive at a ballpark figure you may qualify for. A prequal is a good place to start if you have no idea how much of a home you can afford. It will give you a place to start in your financial planning.

Pre-Approval From a Lender Means…

A preapproval goes into much more depth than a prequal. The lender will look at your credit history, debt to income ratio, spending habits, income, assets and anything that will give them a more solid basis as to what you can afford. Even this is not written in stone. When the underwriters start processing your loan request, many things can change along the way to influence your final loan amount.

A preapproval letter is a very good thing to have in hand before you even start to look at homes. It will give you a better picture of what you can afford in reality so you know what price range to start looking in and it will allow you to make an offer on a home that much quicker because you will have already started the preliminary loan process which will save you and the lender a great deal of time when you find a home you like.

What’s Next in the Homebuying Process.

Getting the loan process started is the biggest piece of the homebuyers responsibilities and having that piece in place will lighten the stress and paperwork burden when you start looking at properties. You will have a pretty solid idea of what you can afford to look at and can plan your search accordingly rather than wasting time on homes that are not in your price range.

Once you have financing pretty much secured, all that leaves for you is to find a property you like and then go through the inspections and property verification processes. During this time it’s very important to follow your buyer’s checklist from your agent and make sure you stay on schedule with the necessary deadlines for paperwork. Failing to meet a deadline could result in a breach of contract on your part and on top of possibly losing the property you want and your earnest money , there may be legal consequences and fines for missing a deadline.

Search right here for a neighborhood you are interested in. Search for key elements you are looking for in a property or home for sale. Find exactly what you want quicker and easier. All right in one spot!