Q & A with America’s Real Estate Professor: Title insurance on refinance

4 Dec

from Norwalk Reflector Dec 2, 2013

Title Insurance on Refinance


Q. I just received my closing statements from my refinance and it looks like I had to purchase another title insurance policy. I’m pretty sure I bought one when I purchased the property, why do I have to buy another? Michael L.


A. Title insurance protects you, the buyer, for issues that could affect the title; that occurred before you purchased the property. These could be items like liens, ownership disputes and unpaid taxes. When you acquired the property, a policy was purchased protecting you. Many times the seller pays for this policy but it’s negotiable; and you bought a policy for the lender.


Yes, it seems foolish to purchase two policies covering the same thing, but you have no choice because your bank demands its own policy protection. Also, the policy you purchase for the bank is generally only for the mortgage amount, whereas the policy from the seller at closing is generally for the entire purchase price.


Now that you are refinancing, you get to buy a new policy for a new lender. Even if it is the same lender, you still get to buy a new policy. This new policy covers the period before you purchased the property, plus the time you’ve owned the property up until the date of refinancing, and any increased loan amount.


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