Title Insurance When Refinancing Your Loan

Title Insurance When Refinancing Your Loan

  • Brian Grimm
  • 04/9/21

Lower interest rates have motivated you to refinance your home loan. The lower rate may save you a tremendous amount of money over the life of the loan, but you should also expect to pay the lender the typical closing costs associated with any new loan, including service fees, points, title insurance protection and other expenses.

Why Do I Need to Purchase a New Title Insurance Policy on a Refinanced Loan?

To the lender, a refinance loan is no different than any other home loan. So, your lender will want to insure that their new loan is protected by title insurance, just as the original lender required. Therefore, when you refinance you are buying a title policy to protect your lender.

Why Does a Lender Need Title Insurance?

Most lenders generate loans and then immediately sell those loans to secondary market investors, such as FannieMae.

FannieMae, in order to protect its security interest in the loan, requires title insurance coverage. Even those lenders who keep original loans in their portfolio are wise to get a lenders policy to protect their investment against title related defects.

When I Purchased My Home, Didn’t I Also Buy a Lender’s Policy?

Perhaps. Who pays for the lender’s policy on a purchase loan varies regionally and by the terms of individual contracts.

However, even if you did buy a lender’s policy when you purchased your home, the lender’s policy remains in force only during the life of the loan that was insured. If you refinance, the old loan is paid off (the “life” of the loan expires) and a new loan is issued for which the lender will require a new title insurance policy.

What About My Original Title Insurance Policy?

When you bought your home, you purchased a Homeowners title policy. The Homeowners’ policy stays in force as long as you or your heirs own the home. When you refinance, your lender will often require that you purchase a new lender’s policy to protect their new security interest in the property. Thus, you are buying a policy to protect your lender, not a new Homeowner’s policy.

What Could Possibly Have Happened Since I Purchased My Home Which Warrants a New Lender’s Policy?

Since the time that the original loan was made, you may have taken out a second trust deed on the house 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 if it has been only 6 months or less 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 purchase or refinance your home.

Are There Any Discounts Available for Title Insurance on a Refinance Transaction?

Yes. Title companies offer a refinance transaction discount or a short-term rate. Discounts may also be available if you use the same lender for your refinance loan and your original loan. Be sure to ask your title company how they can save you money.

Want to find out more about buying a home? Learn more about:

Brian Grimm

Brian Grimm

Co-Founder | Realtor®

About The Author

A Colorado native going back three generations, Brian was born and raised in Littleton and has lived in Douglas County for over 20 years. He primarily serves his hometown, Littleton, and also serves Highlands Ranch, and Castle Rock. 

Brian’s wife Sarah Grimm became licensed in 2003 and was his guide into the real estate industry. He started working as her unofficial assistant, giving him the chance to gain unique hands-on training in the field by being involved in the business, even if not in an official capacity. He learned the ins and outs of the job by creating marketing plans, meeting clients, and even installing open house signs. 

In 2015, Brian and Sarah decided to become partners. Once licensed, they formed the boutique brokerage Luxe Living. Sarah served as Brian’s managing broker for three years while continuing his training. Unfortunately, Sarah had to step down to take care of her health, so Brian took over her former position as managing broker.

Brian’s favorite part of the job is assisting clients and agents alike. He takes pride in being a trusted guide to people experiencing a significant upheaval or transformative change. Brian is a communicative, supportive, caring, and hard-working professional who can simplify what can appear to be a complex process. 

By giving his clients clarity, he empowers them to make crucial decisions with confidence. Brian does this by asking questions, spending time with his clients upfront to find out what their goals and motivating factors are to keep them on track. As a former electrician, Brian also offers years of residential construction experience. In 2020, Brain was awarded the 2 Carat Diamond Award by the South Metro Denver Realtor Association, and in 2021, was awarded the 3 Carat Diamond Award.

Living in the beautiful mountainside with his wife and adorable twin children, Brian loves the relaxed lifestyle, friendly people, and abundant outdoor activities. He enjoys spending time with his family, hiking, mountain biking, fishing, and snowboarding. During baseball season, you’ll often find Brian at the Coors field cheering on the Colorado Rockies.

Brian and his wife, a two-time cancer survivor, are passionate advocates for the Believe Big Organization and the American Cancer Society. They donate a portion of all of their transactions to these foundations. 

Work With Brian

Award-winning realtor with a personal approach to clients. Has extensive knowledge of construction and the real estate process. Proudly serving Denver, Littleton, Highlands Ranch, Castle Rock, and Parker. With marketing strategies for sellers and for negotiating skills to help buyers with the right price.

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