By Marc Shaw
If you have been keeping up with World Wide Land Transfer’s blog, you already know that your lender will require you to purchase a lender’s title insurance policy any time you borrow money to buy real estate. You also know that this policy only covers the lender against title defects; if you want your coverage, you will have to buy a separate owner’s title insurance policy. Although it is not required in many states, an owner’s title insurance policy will be well worth the one-time premium if you should ever run across a costly title defect.
This applies to new real estate purchases, but what about refinancing? Will your title insurance coverage continue? Will you have to buy two new policies? Read on to find out!
If you are planning on refinancing your mortgage, we have some good news for you: the owner’s title insurance policy you purchased before closing on your home will still cover you after you refinance. The one-time premium you paid back then will continue to cover you for legal expenses related to title defects like public records errors, undisclosed easements, and previously unknown wills. You will not have to buy a new title insurance policy. Your lender’s title insurance is a different story.
The value of a lender’s title insurance policy is based on the amount of your mortgage, and as you pay it off, that value decreases. When you pay off your mortgage, the lender no longer needs this coverage, and the policy expires.
When you refinance, your current mortgage gets paid off and a completely new loan is originated. That means that the lender’s title insurance on your original loan will be wiped out and your new lender will require you to purchase a new policy so they will be protected against any title defects that might come up in the future.
Unfortunately, there is no way around this, but when you consider how much money you will be saving by refinancing, it usually pays for itself after you pay the up-front costs.
Whether you are buying a new piece of real estate or you want to refinance the loan on one of your current properties, you need a reliable title insurance company. You should know that in Pennsylvania, New Jersey, and many other states, the buyer or borrower has the right to choose which title insurance company will be providing their coverage, for both the lender’s and the owner’s title insurance policy.
At World Wide Land Transfer, we have been in business since 2004, so you know we are the home title insurance company with the experience it takes to ensure your real estate transaction goes smoothly. Get in touch with us with any questions you may have about title insurance, or to speak with an experienced title agent about purchasing a policy, or about any other title or escrow services you may need.
World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.