Why is title insurance important when
refinancing?
Why do you need to buy title insurance
again even though you purchased a policy when you first bought your home
and there is no change in ownership?
It is because a separate policy is needed
by the lender insuring the validity of your mortgage when it is made.
For as long as you own the property your
mortgage is valid, but it doesn't insure the new mortgage created when
you refinance, and it doesn't provide protection against events that may
have transpired between the time you purchased the property and when it
is refinanced.
For example, you may have taken out a
second mortgage on the home that could threaten the priority of the new
lender's mortgage. Or, there could be legal judgments against you
or a mechanic's lien against the property by a supplier who was not paid
for home improvements.
Lenders also insist on a new title policy
because many mortgages are packaged as securities and sold to investors
in the secondary mortgage market. Title insurance is the only
practical way to provide assurance that investors demand and ensure that
the mortgages backing these securities are valid and enforceable.
For your refinance transaction with
Cambridge Title, you may qualify for a special title insurance rate
based on the loan amount. There may be additional charges for
recording fees, closing fees and endorsements. Your lender can
provide you with an estimate of these costs.
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