Why new Title Insurance with Refinance?

guvnahDecember 19, 2008

Finally think it's time to refinance our 30 year fixed that's @ 6.675%. I don't think things will go much lower, do you?

I talked to Wells Fargo (who has the original loan) & a local bank where we do business and I'm just waiting to see what they come up with. I asked about fees etc. that we'd have to pay & both said "typical closing costs". What surprised me & what I don't understand is why I have to pay for title insurance. I'm not selling the house or even "buying" it. I got title insurance 2 years ago when we bought it. Nothing has changed - still the same property, still owned by us.

Seems like such a racket. Is this standard everywhere? I'm in Texas.

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The title insurance covers the guarantee that the title is clear in the PAST from the point of policy issuance.

You've put on 2 more years during which anyone may have slipped liens into your chain of title.

SHOULD it be DISCOUNTED (I say heck yes!) That's something in open market contention anyway.

Dave Donhoff
Leverage Planner

    Bookmark   December 19, 2008 at 8:22PM
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Thanks for replying Dave - I really appreciate your time.

OK - now I see the point, but nothing like that has happened on ours so it feels like a bit of a rip-off.

    Bookmark   December 19, 2008 at 8:28PM
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You HOPE nothing like that has happened... but you don't have enough capital (like the insurance company does) to stand behind a GUARANTEE.

The title company has the cash and will pay off the lender if you're wrong.

Dave Donhoff
Leverage Planner

PS. ask for a re-issuance discount... its not unheard of ;~)

    Bookmark   December 19, 2008 at 8:42PM
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Thanks again Dave. I wouldn't have known to ask without your help!

    Bookmark   December 20, 2008 at 8:45AM
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I too am thinking of refi.

I realize that I will have to get a new lender's title insurance policy.

In my state, getting owner's title insurance is optional. I got it when I purchases before. MY QUESTION: Will the old owner's title insurance policy still cover title issues that would have occurred up to the point that the prior old policy was issued? In other words, I don't expect it to cover title issues that occurred in past X years after I purchased the property. I know there are no issues during the X years(and I am will to take the risk), but I would like my prior owner's policy to still be in effect as of the original purchase date and not forward issues after the purchase date.

This way I can forego a new owner's title insurance policy when I refi as long as I am ok with any risk of title issues since the last title insurance policy was issued. Unless there is some rule that says the owners policy gets negated completely for all title issues (regardless of when they occurred) if a refi occurs. The title will not change one bit, though. Just looking into lowering the interest rate with a refi. Have at least 75% equity.

    Bookmark   December 20, 2008 at 10:22AM
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If you're asking if the title insurance policy your seller purchased for you when you bought the property would still be in place the answer is yes...if there is something that was missed that wasn't disclosed on the policy when you purchased the property, you definitely would have protection. But you're right, anything that is recorded against the property thereafter isn't. That's why lenders insist on a new title insurance policy when someone refinances - YOU know that you haven't done anything to cause a lien to be placed on your property but your lender doesn't. And sometimes things do come up that are a surprise even to the property owner.

If your title insurance policy has been issued in the last three years definitely ask for a discount...they should offer one.

I worked at a title company for 12 years, up until last July. I got out while the getting was good :) But I miss my job.


    Bookmark   December 20, 2008 at 12:44PM
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One thing, Title Ins may protect you if someone has put any liens or borrowed against your property, without you knowing it--yes this does happen --more that you realize====identy theft.
It might be a cheap insurance to make sure the Title is really clear.

    Bookmark   December 20, 2008 at 10:42PM
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You should be able to get a discount from the previous title insurance company.
They only have to check a few years since they will already have a title abstract from the present policy.

I have also had buyers get a discount when purchasing houses I have restored/updated by using the same company I used, especially after short holding periods (barely over a year).

Depending on how clean the title is I may not purchase an owners policy for a 'work' house.
Purchasing a house from its original owner when they have occupied it for 30+ years has been pretty safe.

If I purchase from an estate I always get the owners policy though.
There could be an heir lurking around that was missed and raises a claim.

    Bookmark   December 21, 2008 at 11:30AM
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An owners policy isn't cheap if you have a lot of equity. I am looking at over $6k for the owner's policy alone.

    Bookmark   December 22, 2008 at 10:09AM
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While lender title insurance on refinance transactions is indeed a standard requirement, there is often discretion as to whether the owner purchases a new owner's policy. There are 2 types of owner's policies: basic and enhanced. While a basic policy protects against events prior to policy issuance, an enhanced policy can provide post-policy protections such as post policy forgery and identity theft, building permit violations of previous owners, violations of restrictive covenants, inability to access the property, and zoning law violations. Additional detail on these policy types can be found at http://www.entitledirect.com, but you should be aware of what type of owner's policy you are being quoted. Agent commission can also account for a significant portion (as much as 70%) of a title insurance premium in most states, so it is important to shop around. Entitle Direct seeks to avoid commissions and reduce the cost of title insurance by selling directly to consumers at a 35% or greater discount in over 28 states, with more being added on a regular basis.

Here is a link that might be useful: Save 35% or more on title insurance with Entitle Direct

    Bookmark   January 8, 2009 at 11:16PM
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Looks an awful lot like advertising.

Did you read the terms for this site?

    Bookmark   January 9, 2009 at 8:03PM
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You can pretty much tell if it's an advertisement if you check when poster joined the GW. This guy joined the day he posted..lol

I don't like cheaters.

    Bookmark   January 10, 2009 at 9:20AM
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No cheating or advertising was intended; I regularly like to stay abreast of conversations pertaining to title insurance and happened to come across this posting and this forum. As I was not a member, I joined with the intention of offering some helpful information that was on topic with the postings in this thread. Consumer understanding of title insurance and its associated options is not at the same level as other insurance products, so my interest is in addressing that knowledge gap. In this regard, I also made reference to my company's offerings as the opportunity to buy title insurance directly from a title insurance company at considerable savings is another valid consumer option but only a very recent one. We are a 30 year old title insurance company that is also the pioneer of the direct sales model, which launched in mid-2008; as we are currently the only title insurance company offering the direct sales option to consumers, it was not relevant to reference that option without mentioning how consumers can take advantage of it.

Here is a link that might be useful: Save 35% or more on title insurance with Entitle Direct

    Bookmark   January 12, 2009 at 3:53PM
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And you just did it again by providing the link to your business.

    Bookmark   January 12, 2009 at 9:30PM
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here in MI, the law makers in Michigan FIXED the amount you will pay for title insurance or reinsurance...

Man, there lawmakers are really out there to make laws to protect the average joe!

I am writing to the Governor and starting a campain in MI to repeal this bleeping piece of...

    Bookmark   January 13, 2009 at 3:48AM
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