So, you’ve decided to refinance your property. Many property owners choose to do this for many reasons, to name a couple it could be to lower your interest rate or to lower your monthly payment. Regardless the reason your lender will require you to purchase title insurance for your refinance. If you’re thinking to yourself, I’ve already bought title insurance, why do I need to buy it again? Don’t worry we’re going to explain why purchasing a new policy is needed.
When you’re refinancing your property more than likely the loan amount is going to be different than what you purchased the property for. An example of this is if you are doing a cash out refinance meaning your going to receive money from the equity in your property. Another thing to keep in mind is you may or may not be doing your refinance with the same lender that you did your purchase loan with. The title policy you purchased when you initially financed your home will no longer be valid. To your new lender, the existing policy on your property is not of importance since it does not protect them. The reason being is the existing policy covers only your current lender and only covers the amount of the loan that you took out at that time. Your new lender will want to make sure that you have insured the new loan with title insurance.
What happens to your original owner’s title policy? Your original owners title policy will stay valid. This policy will stay in effect as long as you own your home. The owner’s policy is different from the lender’s policy.
Title insurance can seem tricky and a bit complicated and may not make sense when doing a refinance so if you have any questions please d