Preparing to refinance your Minneapolis home is a big step toward financial freedom. Many homeowners ask if they need a new title insurance policy when they refinance. The short answer is yes and no.
What is title insurance?
If it’s been a while since you closed on your home, you may need a short review. Title insurance protects both lenders and owner (through two separate policies) from any issues in a title discrepancy. These issues can range from a lien on the property due to unpaid home improvement contractors, errors in a title transfer from a previous owner, or an undisclosed heir from a previous owner. Your title insurance protects you from any loss with problems with your title and your lender’s title insurance protects your lender from the same.
What you’ll need to refinance
When you refinance your home, your old loan will be paid off and your new loan will be issued. Even if your refinanced loan is through the same lender, your lender’s title insurance policy will expire the moment your old loan if paid off. Your lender will require a new lender’s title insurance policy to protect their investment on the refinanced loan. The lender’s policy will protect them in case there is a new lien on your property. Liens can be made against your property since your last closing from a discrepancy that was never found in your original title insurance or from a supplier who hasn’t been paid for a home improvement project.
Ready from some good news? Your owner’s title insurance does not expire when the loan is paid off and is still valid as long as you own the home. No need to purchase a new owner’s policy - your original title insurance policy has you covered.
Purchasing a new lender’s policy
While you won’t need to work with the same title insurance company to purchase your new lender’s policy, it may be a good idea. Some title companies may offer discounted rates for a repeat customer on the same property. We suggest shopping around and not jumping at the least expensive offer. If you’d like more information on what to look for in a title insurance company, check out our article titled What To Look For In Your Minneapolis Title Insurance Company.
Refinancing can bring up a variety of questions and we have the answers. If you’re looking for help with title insurance when refinancing your home, our team is ready to help.