While your lender might strongly encourage you to go with their title insurance company, a federal law called the Real Estate Settlement Procedures Act says that you have the right to choose your own insurance company. In fact, it’s unlawful for a bank or lender to mandate that you use a particular insurer.

Why do you have to pay title insurance again when refinancing?

Even though it could be the same lender, the same property, and the same borrower (you) involved in the refinance as in the original loan, you must have title insurance to protect the lender’s investment. When the original loan is paid off, the original title insurance lender’s policy goes with it.

Do you need title insurance when you refinance a home?

Now, about refinancing: when a buyer refinances, it does not give them a new owner’s policy. However, the homeowner can use their owner’s title insurance policy when refinancing to receive a reissue credit on the loan policy that would be required by the lender at the time of refinance.

Do you have to buy title insurance when you borrow from a lender?

You will be required to buy the policy by most lenders as a requirement to borrow their money. Owner’s Title Insurance is a policy that protects you in case someone tries to make a claim on the property you purchased.

What happens to title insurance when you pay down a mortgage?

As you pay down your mortgage principal, the lender’s coverage declines accordingly. An owner’s title insurance policy protects the homebuyer. For an owner’s policy, the coverage amount is usually equal to the purchase price and remains constant for as long as you or your heirs own the home.

How is title insurance similar to home insurance?

Similar to car insurance or home insurance, which protects you if you were to get into a car accident or if your house burned down, title insurance does the same, but it protects your title to your home against any issues that might arise from previous owners or events.