Title Insurance When Refinancing

In response to a comment to a prior post, when refinancing, the new lender, even if it is the same bank currently holding your mortgage, will require a new title insurance policy to protect its interest in the property. This is because the bank will want to insure itself over any items that may have appeared since the old mortgage such as a judgment against the homeowner or a mechanic's lien, for example.

The cost of this policy is usually paid for by the homeowner. For HELOCs, some banks do not require title insurance and others will pay for it (provided you do not pay off the loan for a certain amount of time).

The good news is that title insurance rates for refinances are dramatically lower than for a purchase. This is especially true if you are refinancing within 10 years of the original mortgage in which case you are entitled to a "reissue rate" which is 50% of the regular refinance rate up to a loan amount of $475,000.00 and 70% of the regular refinance rate above a loan amount of $475,000.00. For example, the regular refinance rate is $1,746 for a loan amount of $400,000.00 so it will be $873.00 if you already had a mortgage on the property.

Make sure that your title company is charging the reissue rate on refinances. Many companies were not doing so and it was resolved in the Court system. They have to give you the lower rate.

Again, the costs discussed herein only include the premium and do not include the cost of recording, the title search and other fees charged by the title company.