Do I Have to Do a Title Search on a Refinance?

A new title search is part of the refinance process.

A new title search is part of the refinance process.

Although it may not make much sense to you, a lender will want a new title search before refinancing your mortgage. You aren’t going to get a new loan without it. Paying for a new title insurance policy can cost you a small bundle, but there are ways to bring down the price. Most closing costs are negotiable, so talk to your lender to find out if there are any discounts for which you might qualify.

Purpose

Title insurance is a cost you have to pay when you refinance your mortgage loan. A refinance loan is actually a new loan; therefore, your lender will want to protect the investment. It doesn’t matter whether you use the same lender or shop for a new one. Title insurance coverage offers the lender protection. Even if it has only been a few months since you bought your home, a lot could have happened. By requiring a new title search as a condition of refinance, your lender is looking to see if any liens or judgments have been recorded against you during the time in between.

Reissue Rate Discount

Contact your title search company if it’s been fewer than 10 years since you took out your current mortgage loan. The company may be willing to reissue your title insurance policy at a reduced rate when you refinance. The National Association of Realtors reports that reissue rate discounts can save you up to 60 percent on the cost -- savings worth looking into. The glitch is you have to know enough to ask about the discount rate when you apply for a refinance loan. Chances are your lender or the settlement company won’t volunteer the information. Rates vary by state. How much you pay also may depend on how long ago you last had a title search on the property and whether you use the same lender.

Quick Title Search

A quick title search is another way to save money on title insurance. Cheaper than paying the full price for a new policy, requesting a quick search can save you about 40 percent on the cost. When a title insurance company does a quick search, it only looks for liens that are new since the last title search. Because you aren’t actually buying a new policy for yourself but a new policy for your lender, refinancing with the same lender makes no difference. The current policy expires when you pay off the old mortgage and refinance a new loan. In the event a creditor placed a lien on the property after you bought it, your lender will need to know. Paying off any liens is generally a condition for refinance.

Buy the Policy Yourself

Doing without the services of a closing agent and buying a new title insurance policy directly from an independent title insurance company can save you big. According to Money Magazine, title agent fees make up nearly three-quarters of the total cost of the insurance. While few people purchase title insurance on their own, buying the policy yourself is a way to save money on closing costs. A title company can offer you a lower premium by dealing with you directly instead of working with your lender or a closing agent.

About the Author

Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.

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