If you are looking into refinancing your home and are wondering whether you need to have another title search performed, you are not alone. Although it may not make much sense to you, a lender will want a new title search before refinancing your mortgage. Lenders will simply not give you a new loan without taking this step first.
Why Do You Need a Title Search When Refinancing?
Title insurance protects the homeowner and also the mortgage lender, so even if you are using the same lender that you used when purchasing your home, they will require a new title search be performed. Since a refinance loan is a brand new loan, the lender wants to make sure that the investment is protected. Even if you have only lived in your home for a few months, a lot could have happened and the lender wants to cover all the bases before entering into a new deal. By requiring a new title search as a condition of refinance, your lender is looking to see if any liens or judgments have been recorded against you during the time in between.
How Much Does a Title Search Cost?
Depending on the complexity of the search and also taking into account whether it is commercial or residential property, the search cost can vary. A single family home can cost a few hundred dollars while more detailed searches for larger properties may cost upwards of a thousand dollars. If you want a more precise estimate on a specific location, you should reach out to a title company to discuss costs.
Quick Title Search Can Save Time and Money
A quick title search is another way to save money on title insurance. Cheaper than paying the full price for a new policy, requesting a quick search can save you about 40 percent on the cost. When a title insurance company does a quick search, it only looks for liens that are new since the last title search. Because you aren’t actually buying a new policy for yourself but a new policy for your lender, refinancing with the same lender makes no difference. The current policy expires when you pay off the old mortgage and refinance a new loan. In the event a creditor placed a lien on the property after you bought it, your lender will need to know. Paying off any liens is generally a condition for refinance.