This is a continuation of the Why Lenders Require Title Insurance When Refinancing Your Home Part I article that talked about why lenders require a title insurance policy during a refinance. We also spoke about why you would pay another premium for a lenders insurance policy if you already purchased one, why lenders typically require a lenders title Insurance policy, and about the life term of a lenders title insurance policy.

When you purchased a home, many of you (the majority of homebuyers) also purchased a home owner’s title insurance policy. This policy is valid indefinitely.

The title insurance policy is valid as long as you or one of your heirs are vested in the title. If you refinance, your lender will more than likely require that you purchase another lenders policy (if you took out a loan when you purchased your house, you were more than likely required to take out a lenders policy) to protect its new interest in the property. Therefore, if you purchased a lenders policy it was to protect the lender, not you the homeowner. That is one of the major differences between a homeowner’s policy and a lender’s policy.

 

Even though you are the owner of the house and have completed the closing process and everything else while negotiating a contract to physically walk through the door of your new house, problems can still emerge.

You could have had taken out a second trust deed on the house or maybe had mechanic liens, child support liens or legal judgments recorded against you since the acquisition of the property.

These are events that could result in serious financial losses to an unprotected lender who did not require a lender’s title insurance premium. Regardless if it has been only 6 months or less since you have completed the purchasing process or the refinance process on your home, a myriad of title defects may have still occurred. While you specifically may not have any title defects, many homeowners do have these issues. The only way for a lender to adequately defend itself is to require the burrower to purchase a new lender’s title insurance policy each time you purchase (if you are taking a loan out) or refinance your home. 

Because many people refinance on a regular basis due to constantly changing mortgage rates, title insurance companies are able to offer a discount, otherwise known as a refinance transaction discount, with a short term rate or a reissued premium rate. Discounts may also be available if you stick with the same lender who completed your original loan to complete your refinanced loan. Be sure to ask your title company how they can save you money.

If you are interested in finding out what your reissue rate for a lender’s title insurance premium please feel free to get a FREE title insurance quote at our website, WWW.MYTITLEDIRECT.COM. You can also give us a call at (516)-222-2444 if you have any questions or concerns about the title insurance process or even questions about the closing process. We will be more than happy to answer any questions that you may have. We are a consumer direct company, and you the client are in our best interest.