Many homebuyers are caught off guard when their lending institutions wish to secure a mortgage survey for a Texas home. They are already familiar with boundary surveys and will likely secure one before they build additional features, so the need for a mortgage survey may be surprising. However, there is nothing intimidating about a mortgage survey—it is just an additional step in the home buying process. Here is an overview on mortgage surveys and why they are necessary.
Purpose of a mortgage survey
Unlike other types of land surveys, a mortgage survey is requested by lenders or insurance companies. It is often required before completing a purchase because it verifies that the property you are purchasing matches the description in the legal documents.
The mortgage survey in Texas lists major buildings on the property, like homes, garages, shops or barns, and indicates whether there is any encroachment on another property. If you share a road or driveway with a neighboring lot, it will identify any easements. It also determines if there is any encroachment from a neighboring property.
Without this confirmation, the lender may not be able to exercise their security interest if you default. For example, if there is a neighboring structure encroaching on your property, the lender knows that in the event of foreclosure, that structure is not part of its security interest. In this event, the mortgage survey would exclude that structure and include any current or future structures (if you intend to build on the property).
Insurance companies want to know for certain what the policy covers and the land and features involved, so any damage to encroaching structures will not be covered by your homeowners insurance. Your neighbor who owns that structure will have to file a claim with their own policy, even if the damage is due to a condition on your land.
The mortgage survey does not contain the same detail as a boundary survey. In fact, mortgage surveys do not include boundary lines. If you want more information on boundaries, you need to order a boundary survey.
Requirements of mortgage survey
Mortgage survey requirements depend on expected improvements. If you are planning to build, a more detailed survey is necessary to secure a permit. In that case, your mortgage survey may contain elements of a detailed boundary survey. But if the only purpose of a mortgage survey is to secure a loan, then it will be a bit less detailed and only contain an inventory of the structures on the property.
If your insurance carrier or lender requires a mortgage survey in Texas, they will either order it on their own or ask you to produce it. When it becomes your responsibility to secure the survey, you may as well order a detailed survey so you are not paying for multiple surveys on your new property. One comprehensive survey will cost less than multiple boundary and mortgage surveys.
D.G. Smyth & Co., Inc. performs land surveying throughout Texas. If you require a boundary or mortgage survey, contact our office today to schedule an appointment.