Why Lenders Require Title Insurance When Refinancing Your Home

It may surprise you to learn that lenders do not differentiate between a standard loan and a refinance loan. Why is this important for you to know and how does it affect you?

Lenders will want to ensure that the loan is protected and require you to purchase mortgage insurance which is now commonplace.

Lenders will often sell loans to secondary market investors and the insurance on the loan provides extra security thus adding value to the investment.

Something important to keep in mind is that if you already had coverage from your previous loan it will be voided when you refinance.

Essentially, by refinancing you’re purchasing a new loan with new terms in your contract. With respect to an original title policy, this will stay in effect as long as you and your heirs own the home. Keep in mind that as these transactions are initiated it is always in the best interests of the lender to protect itself.