So, I have often been asked the question, “Why do I have to pay for title insurance again? I thought I was told it’s a one-time fee for as long as I own my home!”
Well yes, it is. However, what you are now buying is a lender’s title policy for the new lender, but your owner’s title policy is good for as long as you own the home. If you already have an owner’s policy, you can often get a “reissue credit” on any future lender’s title policies that you may be required to purchase when you refinance. Also, if you refinance your loan with the same lender, they may provide additional discounts. A mortgage policy is only good for the life of that loan, hence the reason for a new policy on a new loan, even if it’s with the same lender!
Believe it or not, entities can put liens against you and your property without you knowing (i.e. identity theft). This new policy when you refinance will protect the bank and you, considering that you are now aware of what may have happened since you purchased the property. Since the time that the original loan was made, you may have taken out a second mortgage on the home 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 of the time 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 refinance your home.
The ONLY time you may not be required to get a new title insurance policy is if the current mortgage loan was re-written by that lender, changing terms or interest rates, but NOT the loan amount.
At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.
In case you missed it, check out our last Title Junction post: Getting a Visual on Closing Costs