How Does Refinancing Affect Title Insurance?


People refinance their homes for many reasons. Most commonly, refinancing is used to readjust the terms of the mortgage loan or to get a lower interest rate. If you’re considering refinancing your Lake of the Ozarks home to take advantage of a lower rate or more favorable terms, you most likely are looking to learn about the upfront costs. One thing you may not have thought about regarding refinancing, though, is the impact it will have on your title insurance policy. If you're thinking about refinancing your home at the Lake of the Ozarks, Arrowhead Title has provided some important information to keep in mind.

Refinancing - It's Still A Home Loan

When you refinance your home, you are essentially taking out a new loan to pay off the original loan in full.  This applies even if you are refinancing through the same lender that originated your current loan.  Because you are taking out a brand-new loan, you will have to undergo the same process (and cover the same costs) that you did when you originally purchased your home. For example, you will probably need to:

  • Purchase a professional appraisal of your property
  • Cover the closing costs associated with the loan, such as service fees, points, and title insurance fees
  • Purchase a lender's title policy to protect the lender

Your lender will provide you with an estimate of the total closing costs, which will include an estimate for title insurance. Even though the loan policy protects the lender, you have a right to select which title company is used - so please keep us in mind!

Refinancing & Lender's Policies

Because refinancing means taking out a brand-new loan, lenders will require a new lender's policy to protect their investment in your property.  The original lender's title insurance policy doesn't insure the new mortgage created when you refinance.  You may have been the sole owner of your property since you originally purchased it, but that does not mean that your property is free from new title risks. That means that the lender is vulnerable to these risks as well.  In any case, the original policy would not protect the lender against things that happened during your ownership period.   For example, you may have taken out a secondary home loan or you could have had various liens placed against your property. All lenders require lender's policies to protect them, and the new loans used to refinance homes are not any different.

Refinancing & Owner's Policies

Unlike the lender's policy, owner's title policies protect you, the owner, and your investment in your property.  The owner’s title policy remains in effect for as long as you own the property.  The lender may change during the refinancing process, but you will remain the owner of your home. Since the homeownership will not change, you will not need to purchase a new owner's policy.  Whether you refinance your home one time or ten times, as long as you remain the owner of the property, your owner’s title policy will protect you against title defects and hidden encumbrances and claims.

Let Arrowhead Title Answer all Your Refinancing Questions

Title insurance can seem confusing to many people. If you have questions about title insurance policies and how they will impact the process of refinancing or buying a home at the Lake of the Ozarks, don't hesitate to reach out to the team at Arrowhead Title. With over thirty years of providing title insurance at the Lake of the Ozarks, we are ready and able to help you with all of your title insurance needs.

The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!



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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 65049

Comments

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