Why Do I Need Title Insurance When Refinancing a Mortgage?
Are you considering refinancing your home loan? Whether you want to take advantage of favorable terms and conditions or a lower interest rate, you will have to pay certain expenses when taking out a new loan. These expenses include title insurance and service fees.
But what is title insurance and why do you need it to refinance a mortgage? Here’s everything you need to know about title insurance:
Title insurance is required for several reasons. Buying a home is a complex task that involves several legalities.You need to meet all of the legal requirements to ensure a defect-free title. In short, title insurance allows you to mitigate risks to your homeownership title.
Since purchasing a home is complex, there are several things that can go wrong and lead to a defective title. This is the last thing that you want as a homeowner.
The good news is that you can avert potentially costly risks to your title by just making a one-time payment for your title insurance policy. You will have to make just one small payment. Title insurance is much cheaper as compared to auto and health insurance.
This is a small price to pay to protect your ownership rights from perplexing legal matters that even seasoned home buyers may not be fully aware of. Keep in mind that unlike other insurance policies, title insurance does not protect you against future risks. It protects you against past events that can jeopardize your home title. As surprising as it may seem, there are all kinds of possibilities where events from the past may threaten the lawful ownership of your new home.
Since purchasing a new home is one of the biggest investments that you will ever make in life, you want to be fully certain that the title to your home is free from all types of unforeseen threats that can possibly challenge your lawful ownership of the property. You must take all possible steps to ensure that your title is defect-free since it is your proof of the legal ownership of your property.
Why Is Title Insurance Needed During Refinance?
Title insurance is designed to protect your property investment against threats that may transpire at different stages. It can protect you during refinancing, property resale and construction. Once property ownership is transferred, the new owner should purchase title insurance to protect their ownership rights.
There is a lot that can go wrong after you purchase your new property. New legal judgments or new liens might adversely affect your property title. Similarly, other title defects can possibly come to the fore.
A mortgage lender can protect your investment with the help of title insurance. Title insurance will ensure that the risks to the refinance loan are diminished. In case you need further information on this key aspect of home purchases, feel free to take our consultation.Contact us today.