If you’re considering refinancing your home—and now may be a good time to do so—you may be wondering if you’ll need a new title insurance policy. While current your owner’s title insurance policy is still good, your lender will require a new policy if you decide to refinance your mortgage.
Why Does the Lender Need a New Policy?
To the lender, a refinanced loan is no different from any other home loan. Your new lender will want the protection of a title insurance policy, just as the original lender did. Your old policy was written for the previous lender; it does not transfer to your new loan. Therefore, you’ll need to purchase title insurance when you refinance your mortgage.
In addition to requiring title insurance to protect their own interest in your loan, most banks sell new mortgages to secondary market investors, such as Fannie Mae. These investors require title insurance coverage in order to protect their investment. Without a policy, your lender would be unable to transfer the loan.
What if it’s Only Been a Short Time?
Even if you refinance just a few months after purchasing or refinancing your home, certain events could jeopardize a lender’s interests. If you or a co-owner has had any liens or legal judgments against you, that could result in serious financial losses for the refinancing lender.
A title defect can occur at any time. The only way a lender can ensure it’s protected from title defects is to require a new title insurance policy as a requirement for issuing the loan.
Could You Qualify for a Title Reissue Discount?
If you’re refinancing within 10 years of your original home loan, ask us if you qualify for a reissue discount. In many cases, we can reduce your cost for title insurance by reusing some of the same forms and paperwork used for your previous policy.
Smart Title Can Help You
We’re known throughout Tennessee for our professionalism and expertise, and we’d love to help you. Call us at 615-393-6222 or contact us online.
We’ll be happy to answer your questions about title insurance, explain the closing process for buyers (or for sellers, if you’re interested), and show you how title insurance protects your investment throughout the years you own your home.