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Ask
an expert: Title insurance and refinancing
Q: If I refinance my mortgage, do I need to get a new
title insurance policy?
A: Yes, if you refinance your mortgage you do need to
get a new title insurance policy. But if it has been less than
five years since you took out your previous policy, you will
likely qualify for a cheaper “reissue rate.?/strong>
You may also be able to save money by comparing rates offered by
various title insurance companies. In many states, however, the
rates are set by the government and are not negotiable.
The reason lenders require you to take out title insurance is to
protect themselves against any potential disputes over the
ownership of your property. If, for example, you bought a
property that was co-owned and one of the previous owners
neglected to sign the transfer deed, you could, down the road,
be faced with a claim against your property. Title insurance
protects the lender against loss resulting from any such claims.
Unlike other forms of insurance where you are typically required
to pay a monthly or annual premium, you pay for title insurance
only once at the time of closing, unless you refinance your
mortgage. The reason you must get a new title insurance policy
when you refinance is in order to protect the lender from any
liens against your property that may have occurred between the
time your previous policy was issued and the time of your
refinance.
Along with title insurance that covers the lender, there is a
second form of title insurance that covers you, the buyer,
against losses resulting from claims against your property. This
personal title insurance is not required but is advisable
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