You’re taking the plunge and refinancing your home. Maybe you spotted a better rate, want to knock a few years off your mortgage, or just want a little more wiggle room in your monthly budget.
No matter what’s nudging you towards it, refinancing is a smart play for saving money and making your finances a little more manageable.
But – because there’s always a but – there’s some red tape involved. One piece that might ring a bell is title insurance. You first came across it when you bought your home, though that memory is probably buried somewhere in the giant stack of closing documents you signed.
When you’re refinancing, though, title insurance plays by slightly different rules. It’s not too complicated, but having a clear picture of what it is and why it matters will help you feel more confident going into the process.
What’s the Purpose of Title Insurance When Refinancing?
When you’re refinancing your home, your lender will definitely want to make sure the title is still clean and clear before approving your refinance loan.
Even if you’ve lived there for years without a single hiccup, there might still be things lingering in the background. These could include title defects and other issues you’d never know about because they slipped through the cracks the first time around.
But what kind of issues?
- Old or unreleased liens from previous owners (or past work on the house)
- Paperwork mistakes hiding in old records
- Ownership disputes or surprise heirs claiming a stake
- Fraud or forged documents somewhere in the property’s history
- Boundary or survey quirks that might affect property lines
If even one of these issues comes up, you’ll need to deal with it before closing.
Does Everyone Need Title Insurance When Refinancing?
Technically, no. For example, you don’t need to buy a new owner’s title policy if the one you bought when you purchased your home is still in effect.
But keep in mind: that situation is the exception, not the rule.
The lender’s policy is the one that’s almost always required. Any time you take out a new loan – even during a refinance – your lender will want protection against title issues that could affect their ability to recover the loan.
That’s why they’ll require a new lender’s title insurance policy at closing!
Who Pays for Lender’s Title Insurance?
Ahh, the big question! When you refinance, you – the homeowner – are the one who pays for the lender’s title insurance. It’s rolled into your closing costs, right next to things like the appraisal and recording fees.
Even though the policy protects the lender, not you, it’s totally normal for borrowers to cover it as part of getting the new loan. The upside? It’s a one-time charge, not something that hits your monthly bills.
And just a heads-up: no matter which lender you go with, this fee is pretty much always part of the deal. The price can vary, but who pays for it usually doesn’t.
What Happens If a Title Issue Is Found During a Home Refinance?
Most of the time, the title company will work to clear the issue – like tracking down releases for old liens – before you can close. If the issue is on the more serious side, it could delay the refinance. But don’t panic – that’s exactly why title insurance exists!
Do I Need Title Insurance If I’m Refinancing with My Original Lender?
Yes, almost always. Even if you’re staying with the same lender, your refinance replaces your old loan with a brand-new one. And since each new loan brings its own risks, the lender will want updated protection in case any title issues pop up.
Think of it this way: they can’t just rely on whatever was checked during your old loan. A new lender’s policy gives them a fresh start and makes sure hidden problems won’t interfere with the new loan.
What to Look For in a Title Insurance Company
When you refinance, you’ll probably get a couple of suggestions for title insurance – maybe from your lender or maybe from your attorney. But you can also pick your own!
That’s why it’s a big help to know what matters when picking a provider for your new title insurance policy. Here are a few things to pay attention to:
- A solid reputation: You want a company that many people have praised highly for their skills and knowledge. A quick look at reviews will clue you in to how they treat customers.
- Straightforward communication: Go with a provider who explains things clearly and doesn’t make you dig for answers. Refinancing is confusing enough as it is, right?
- Reasonable pricing: Title insurance rates don’t usually swing wildly, but it’s still worth comparing quotes – some companies offer better deals for refinances.
- Quick turnaround: A slow title company can drag out your whole refinance, so speed definitely matters.
- Helpful customer service: If something pops up, it’s nice to know you can get a real person on the phone without jumping through hoops.
Need Title Insurance for Your Refinance? Trust Brick City Title
If you’re getting ready to refinance and want to simplify the title side of things, Brick City Title is a great place to start. We explain things clearly, keep the process moving, and make sure you get the coverage your new mortgage loan requires.
And if you’re wondering what title insurance protects, we’re happy to break it down to eliminate any confusion.
If you’ve got questions or you’re ready to move forward, just reach out. We’re here to make the refinance process a whole lot easier for you and your lender.
