If you are refinancing, you may be surprised to see title insurance on your closing estimate again. Here is why it is there.
Two kinds of title policies
When you bought your home, there were likely two policies:
- An owner's policy, which protects you and lasts as long as you own the home.
- A lender's policy, which protects the lender and ends when that loan is paid off.
Why a new policy is needed
A refinance pays off your old loan and creates a new one. The old lender's policy ends with the old loan, so the new lender requires its own policy to protect its interest in the property. Your owner's policy from the purchase generally stays in force; it is the lender's coverage that is replaced.
What the title search looks for
Since your purchase, things may have been recorded against the property: a home equity line, a contractor's lien, unpaid taxes or a judgment. The title company searches the records to make sure the new lender's lien will be in the right position and that any problems are resolved at closing.
Keeping costs down
Title rates in Illinois vary by company, and some offer reduced rates on refinances, especially if your last policy was issued recently. It is worth asking your lender and title company whether a reissue or refinance rate applies.
Questions about title or closing? Contact us and we will point you in the right direction.