Now is a great time to refinance your home to take advantage of lower rates or more favorable terms. Even if you refinance through the lender that originated the current loan, you likely will have to pay closing costs such as service and title insurance fees.
Our title insurance pros at True Concept Title discuss why title insurance is required, even during a refinance.
What is Title Insurance?
Title insurance can seem like a mystery, even if you have bought and sold several homes. Simply put, title insurance is a one-time fee at closing. Title insurance protects your investment against liens, title issues, or legal issues that arise during the closing process. It also helps protect your house against future title theft.
You may need to purchase two types of title insurance policies when buying a home: a lender’s policy and an owner’s policy.
Who Is Protected Under the Two Types of Policies?
Each time a property changes hands, a new owner’s policy should be purchased. Title insurance safeguards your investment at different points, including:
- When it’s a new-construction home
- When you buy a new home
- When there is a property resale
- When a home is refinanced
For transactions in which a lender is involved, a title insurance lender’s policy is always required. Your lender is not trying to pull one over on you! Even though you may be using the same lender for your refinance, are refinancing the same property, and are the same borrower, you have to purchase title insurance to protect the lender’s investment.
Why? Well, a lot could have happened since you bought your home. The property title could have new liens or claims against it, or other title faults could have come to light. Your mortgage lender can protect its investment with title insurance and issue you a refinance loan with less risk.
A Refinance Loan Is New, Not Old
Many homeowners are surprised by this title insurance requirement because they often misunderstand what a home refinance is — and isn’t.
A refinance loan is NOT a revision of your initial agreement. When a home is refinanced, the original mortgage is paid off, and a NEW loan is originated.
When the original mortgage loan is paid off, the title insurance lender’s policy that you purchased goes with it. Without a new policy, the lender could face significant risk. Therefore, they require title insurance.
Refinancing your home doesn’t have to be daunting. With True Concept Title, you have expert help nationwide through every step in the title insurance and refinance process. Refinance with us today, 813-263-7168! You have a choice.
What About my Owner’s Title Insurance Policy?
If you purchased a title insurance owner’s policy during the home-buying process, the policy remains in effect throughout your refinance. Further, as long as you or your heirs own the property, your owner’s title insurance policy will protect you.
Title Insurance Is a Necessity
You may not have anticipated paying for a title insurance lender’s policy when you decided to refinance your home, but the purchase is necessary to complete the process.
From your lender’s standpoint, a refinanced loan is like any other mortgage loan, and they must protect their investment.
Refinance with True Concept Title
If you are ready to refinance your home, True Concept Title can help! We support refinance loan processing with national title insurance and escrow services.
Choose True Concept Title for quick turn-around times, centralized processing, and timely loan disbursements. We even offer mobile closings for your convenience. Don’t miss out on lower mortgage rates. Call 813-263-7168 to speak with a title insurance specialist today!