Real estate is a major financial commitment for most Americans and one of the most valuable assets to own. To protect such an investment, many homebuyers opt to purchase title insurance, which helps safeguard against financial loss in the event title defects surface after closing. While lenders generally require homebuyers to purchase a “lender’s” title insurance policy, “owner’s” title insurance is entirely optional – but highly recommended. Here’s why.
Clouds on Title
Title defects, also referred to as “clouds on title,” are obstacles preventing the proper and full transfer of ownership from one person to another, giving one or more parties some sort of claim, rights of use, or value of possession in a property. There is a wide array of title defects that can exist, but some of those most common include unreleased deeds of trust, clerical or recording errors, improperly probated wills, and judgments or liens. Any type of title defect, no matter how seemingly minor, can stall the closing process and interfere with a real estate sale.
Lender’s vs. Owner’s Title Insurance
Mortgage lenders almost always require homebuyers to purchase a lender’s title insurance policy, which protects the financial institution against loss that may arise from the discovery of title defects after closing or if the mortgage becomes unenforceable for any reason.
Though owner’s title insurance is not mandated, it is generally recommended for the majority of homeowners. An owner’s policy can cover legal costs should it become necessary for a homeowner to defend their property rights in court. It can also remunerate the policy holder if they lose the property to another party over such enforceable property rights. As a one-time payment, an owner’s policy is purchased at the time of sale and covers the homeowner for as long the property remains in their possession. Owner’s title insurance policies are typically valued at the original purchase price.
Get the answers to your title insurance questions today! Contact our experienced team at Linear Title & Escrow to learn more.
With interest rates still among the lowest in recent years, refinancing your home loan may be something you wish to consider. Refinancing a mortgage can be beneficial in a number of scenarios, from reducing interest rates and monthly payments to replacing one type of mortgage product with another that better serves your needs. Some homeowners even refinance to cash out a portion of the equity accrued in their properties.
If you have never refinanced a home loan before, you may be wondering if and how the closing process differs from the initial sale. Read on to learn what you need to know when preparing to close on your refinance loan.
Refinance vs. Initial Sale Closing: What Is the Difference?
Some people are surprised to learn that refinancing an existing mortgage still requires the formal process of a settlement, or closing. While there are a number of general similarities between closing on an initial sale and a refinance, the process of refinancing differs in a few ways:
• Time: Though the same number of steps must be taken during the loan approval process, the time from application-to-close is slightly faster with a refinance loan when compared to the initial sale. On average, the timeframe is between 30 – 45 days.
• Closing Costs: While you will still be responsible for closing costs when refinancing your mortgage, the overall percentage may be less than what you paid during your initial purchase. Refinance loans generally carry no fixed costs.
• Title Insurance: If an Owner’s Title Insurance policy was purchased at time of sale, then a re-issue rate is given on the Lender’s Title Insurance policy for the refinance loan.
What to Bring to the Closing Table
Closing day is generally the same, whether you are purchasing a home or refinancing an existing loan. The items you will need to bring to your refinance closing include:
Certified check (in the exact amount due)
Proof of homeowner’s insurance
Have other questions about closing on your refinance loan? Get in touch with the team at Linear Title & Escrow today!