“When it comes to refinancing a property is a new title required, a Refinance Title, if you will?” That question is often asked of title companies and a simple explanation will supply the answer.
The two types of title polices: an Owner’s Title Insurance Policy which protects the owner from any challenges to the title in the future and the Lender’s (or Loan) Insurance Title Policy, which similarly protects the lender.
When you bought your home, you may have purchased an Owner’s Title Insurance Policy and that need not be repurchased when you refinance.
But the Lender’s (or Loan) Title Insurance Policy only covers the time period when the mortgage existed and, since you are refinancing, you are getting a brand new mortgage, so you will need to get a new Lender (or Loan) Title Insurance Policy underwritten on your property for your refinance.
The Refinancing Title Process
How this process goes is fairly standard. A title order will be initiated. The identify of the property to be searched and insured will be ascertained and a legal description confirmed. The type of title policy to be issued will be determined and the owner’s names run in compliance with the US Patriot Act.
As with the initial mortgage, for the Refinance, a title search will be performed. A Geographical Title Search will be undertaken wherein historical title is researched and prior owners determined (as well as any others having some interest in the properties). A “chain of ownership” and “right of interest” in the property
is established and documents that support that chain discovered. An Individual Name Title Search is made of public records to determine pending litigation, judgments, liens, tax documents and any other relevant information to the title. A Property Tax Search comes next to determine the status of all things tax-related, including any special bonds or assessments and any lien amounts.
When the title search is complete, the work is reviewed by the title company, necessary amendments, land inspections, and any court case examinations are made and a preliminary report issued.
If any and all defects found in the title are taken care of, the clear title necessary for the refinance can be issued and the transaction completed between the lender and the property owner who applied for the refinance.
For more information on Refinance and your title, visit www.alta.org.