Welcome or Register
Back to Table of Contents

Title Insurance When Refinancing Your Loan

Lower interest rates have motivated you to refinance your home loan. The lower rate may save you a tremendous amount of money over the life of the loan, but you should also expect to pay the lender the typical closing costs associated with any new loan, including service fees, points, title insurance protection and other expenses.

Why do I need to purchase a new title insurance policy on a refinanced loan?

To the lender, a refinance loan is no different than any other home loan. So, your lender will want to insure that their new loan is protected by title insurance, just as the original lender required. Therefore, when you refinance you are buying a title policy to protect your lender.

Why does a Lender need title insurance?

Most lenders generate loans and then immediately sell those loans to secondary market investors, such as FannieMae.

FannieMae, in order to protect its security interest in the loan, requires title insurance coverage. Even those lenders who keep original loans in their portfolio are wise to get a lenders policy to protect their investment against title related defects.

When I purchased my home, didn’t I also buy a lender’s policy?

Perhaps. Who pays for the lender’s policy on a purchase loan varies regionally and by the terms of individual contracts.

However, even if you did buy a lender’s policy when you purchased your home, the lender’s policy remains in force only during the life of the loan that was insured. If you refinance, the old loan is paid off (the “life” of the loan expires) and a new loan is issued for which the lender will require a new title insurance policy.

What about my original title insurance policy?

When you bought your home, you purchased a Homeowners title policy. The Homeowners’ policy stays in force as long as you or your heirs own the home. When you refinance, your lender will often require that you purchase a new lender’s policy to protect their new security interest in the property. Thus, you are buying a policy to protect your lender, not a new Homeowner’s policy.

What could possibly have happened since I purchased my home which warrants a new lender’s policy?

Since the time that the original loan was made, you may have taken out a second trust deed on the house or had mechanic’s liens, child support liens or legal judgments recorded against you - events that could result in serious financial losses to an unprotected lender. Regardless if it has been only 6 months or less since you purchased or refinanced your home, a myriad of title defects could have occurred. While you may not have any title defects, many Homeowners do. The only way for a lender to adequately protect itself is to get a new lender’s policy each time you purchase or refinance your home.

Are there any discounts available for title insurance on a refinance transaction?

Yes. Title companies offer a refinance transaction discount or a short-term rate. Discounts may also be available if you use the same lender for your refinance loan and your original loan. Be sure to ask your title company how they can save you money.

Article by CLTA

Back to Table of Contents

Mike Hill Property Management - The premier resource for Property Management in Valdosta, Moody AFB, Lowndes and surrounding county areas.

Whether you're interested in finding a home to rent , having your rental home managed or just browsing…the internet is an excellent place to start, but no website can take the place of an experienced REALTOR®.    When you're ready to make a "move", allow us the opportunity to provide our many years of experience and dedication to your advantage.  Contact Us  with your

questions and for individualized advice and assistance.  It will be our pleasure to assist!

Mike Hill Property Management  Team

 

2215 Bemiss Road Suite F 
Valdosta, Georgia 31605
229-242-1401
www.mikehillrealestate.com

Contact Us

Thank you for visiting our web-site…whether you have a question about a specific property or a general real estate question we welcome your participation. Send us an email! No problem if you don't want to leave your phone number, but please provide your name and a valid email address. We will get back with you as soon as possible.

Again, thanks and we look forward to hearing from you!

MIKE HILL Real Estate

 





* fields are required

Mike Hill Property Management - The premier resource for Property Management in Valdosta, Moody AFB, Lowndes and surrounding county areas.

Whether you're interested in finding a home to rent , having your rental home managed or just browsing…the internet is an excellent place to start, but no website can take the place of an experienced REALTOR®.    When you're ready to make a "move", allow us the opportunity to provide our many years of experience and dedication to your advantage.  Contact Us  with your

questions and for individualized advice and assistance.  It will be our pleasure to assist!

Mike Hill Property Management  Team