The Importance of Title Insurance for Protection

Aug 25, 2017

When you refinance a home and look forward to reduced mortgage payments, you’re actually taking out a loan – again – on the same property. Although you purchased Title insurance during the original mortgage creation process, you might not think it’s during the refinancing process. However, you’re getting a new loan – even if you stay with the original lender. And the process comes with an important question for both you and the lender: is the title still “free and clear”? This question should also be at the top of your list so you can enjoy the full benefits of homeownership without the concern that your interests could be jeopardized.

Why Title Insurance is a Big Deal

You do not have to purchase a new homeowners insurance policy, however, the principle is different when it comes to Title Insurance. Lenders want to protect their investment in your loan, so it’s customary for them to require a new title search and loan policy. The background information discovered during the underwriting process also protects you from unexpected expenses that could arise from the discovery process. No one likes those types of surprises.

What You Might Not Know

Most homeowners don’t realize that their property rights could actually be affected – perhaps in how the property is used or is even restricting their rights as an owner of the property. That’s because liens or judgments can be placed against a property at any time.

  • A contractor for home improvements who claims payment was not provided could result in a mechanics lien;
  • Unpaid taxes, court judgments, child support and even homeowner dues like those found in some deed restricted communities could affect the title; and
  • Even property building or use can be restricted by official information recorded in land agreements, deed, and plats.

While it might seem like an additional expense in your efforts to reduce them – a resulting clear title allows confidence that the property is free and clear – and ready to be fully enjoyed. Contact Beaches Title today for any queries and assistance.