Today’s lower interest rates have spurred you to refinance your mortgage. Now you can expect to reap the benefits of substantially reduced monthly mortgage payments, but you can also expect to pay the lender the typical closing costs associated with any mortgage loan.
Why? Because from the lender’s standpoint, a refinanced loan is no different than any other mortgage loan. So be prepared for service fees or points and other expenses including a new charge for title insurance.
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’s 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 wasn’t 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 the assurance investors demand and to ensure that the mortgages backing these securities are valid and enforceable.
For your refinance transaction with the Chicago Title and Trust Family of Companies, 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.
Once you have made the decision to refinance your home, you’ll want your transaction to progress as smoothly and efficiently as possible. In an effort to avoid potential problems and delays, consider the following points. Check with your real estate agent to determine which ones apply to you.