Why Refinancing Requires Title Insurance?

Why Refinancing Requires Title Insurance?

Why people refinance and what they need

Borrowers refinance their mortgages to improve their financial standing. They look for lower payments, reduced interest and better terms overall. Having to purchase title insurance when they already purchased a title insurance policy when they bought the home may seem like an unnecessary expense. However, title insurance when refinancing is a must because the lender requires it.

Instances where title insurance is needed

A title insurance policy protects the lender from a number of hazards in the mortgage process. Since there has been a mortgage, the current borrowers may wonder what problems might arise.

Inheritance status

One class of errors are those regarding inheritance status. The insurance protects the lender when an unknown heir is discovered or comes forward. The fact that the heir has been missing or undisclosed does not change their status in the inheritance.

Liens on the property

Title insurance covers liens that may have been made on the property. These include liens made by contractors for unpaid work as well as tax liens and many other types of liens.


Insurance protects against errors. If there have been errors in the deeds recorded over the years or if any of the documents were not carefully examined the title needs to be protected.Before a title insurance company will issue a policy they will do all the research to make sure the title is clear. Title Insurance companies will examine public records. They will be looking at deeds, mortgages, tax status, divorce records, foreclosure records, probate records, maps of the property, and much more. They will determine if there is anything at all that might be a blemish on the title.Beyond a title insurance policy that the lender requires, the person seeking to borrow for refinancing will likely want to insure their own interests as well. It is an extra expense, but if the lender needs to secure all interests in the refinanced loan, the borrower also needs their own, separate policy. Owning a home is probably the largest financial investment a person or family will ever make. It is in their interest to protect the value of the funds that they will invest. These are the reasons that title insurance is a must when refinancing a mortgage on a property.]]>

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