Home › Forums › Closed Forums › Buying and Selling RE › Is title insurance really necessary with refi?
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April 15, 2012 at 10:01 PM #19699April 16, 2012 at 9:41 AM #741721HLSParticipant
There are 2 different types of title insurance policies.
When you buy a property you receive an OWNER’S title insurance policy that gives you clear title to the property forever. (Typically paid for by the seller, but always negotiable)
When you get a loan,either at time of purchase OR when you refi, you are providing the lender with a LENDER’S title insurance policy. Lender needs to have clear title.
April 16, 2012 at 9:48 AM #741722bearishgurlParticipantMoneymaker, if you have purchased that same property or refied it in the last 3 years (is this still correct, HLS?), I believe you will qualify for a “short-term rate” on your ALTA title policy. This is a discount off the regular rate as they will search for liens against you or the property which were filed in the last three years only.
If you are eligible, be sure to ask your escrow officer for the “short term rate” on your title policy.
Most lenders who do refis require an *new* ALTA title policy, even if you just purchased or refied the property <=1 year ago. The exception is a HELOC lender who may conduct their own title search before extending the line of credit. The outcome of this search will help them to determine the amount of credit to extend to the property owner (if any). If these lenders DO require a title policy, they will usually pay for it.
April 16, 2012 at 9:50 AM #741724bearishgurlParticipant[quote=bearishgurl]Moneymaker, if you have purchased that same property or refied it in the last 3 years (is this still correct, HLS?), I believe you will qualify for a “short-term rate” on your ALTA title policy. This is a discount off the regular rate as they will search for liens against you or the property which were filed in the last three years only.
If you are eligible, be sure to ask your escrow officer for the “short term rate” on your title policy.
Most lenders who do refis require an *new* ALTA title policy, even if you just purchased or refied the property <=1 year ago. The exception is a HELOC lender who may conduct their own title search before extending the line of credit. The outcome of this search will help them to determine the amount of credit to extend to the property owner (if any). If these lenders DO require a title policy, they will usually pay for it.[/quote] edit: Clarification that an "ALTA" policy is a lender's title policy and a "CLTA" is an owner's title policy, purchased upon title transfer. The "CLTA" policy is significantly more expensive that an ALTA policy, for obvious reasons. Sorry for any confusion.
April 16, 2012 at 10:15 AM #741730HLSParticipant[quote=bearishgurl]if you have purchased that same property or refied it in the last 3 years (is this still correct, HLS?), I believe you will qualify for a “short-term rate” on your ALTA title policy. This is a discount off the regular rate as they will search for liens against you or the property which were filed in the last three years only. [/quote]
There are all inclusive bundled rates available for refi transactions today that include a lender’s policy. They offer no discount due to age of policy. Seems like consumer is getting screwed.
Using an independent escrow company can cost more than using the escrow arm of a title company.
The liability is potentially huge on either policy, but very rarely does anyone ever have a claim.
Title insurance companies should be cleaning up today with all the refi activity.Collecting $600 for a policy that is valid for 30years is one thing, but they collect the same premium for a policy that may only be in effect for a few months.
There is still much confusion about who actually owns properties in certain states. A major problem could cause financial hardship for a title insurance company.
April 16, 2012 at 10:29 AM #741732HLSParticipantSeller usually pays for OWNER’S policy.
They would probably need to pay extra at time of origination for a ‘binder’ that would allow the owner’s policy to be transferred with a covered time period. Why would they want to do this ??If you plan on selling a home within a couple of years, you would want this binder as it will save you money (when YOU sell), but because the seller usually pays for the policy, buyer’s don’t get the binder. (A buyer could offer to pay for the binder)
I don’t think that it is automatically included with a CLTA policy.
**Just another little loophole that very few people are aware of.
April 16, 2012 at 12:00 PM #741753bearishgurlParticipantSo, I take it that the “short-term rate” of yesteryear (for frequent refinancers, owners who do not hold property long and flippers) has gone by the wayside in favor of bigger title-company profits?
I think it is ridiculous to charge full price for an ALTA policy for a frequent refinancer. They’re already getting shafted by repeatedly paying transaction fees and (now grossly inflated) recording fees (and sometimes points).
April 16, 2012 at 1:57 PM #741756SD RealtorParticipantHLS good to hear from you again!
April 27, 2012 at 3:11 AM #742313AnonymousGuestHi,
Thanks for sharing this article with us. Now a days insurance companies is a very big issue for every health, houses, offices and for our personal household and also for any debt matter.Insurance and loans are very essential for quick coverage the damages and its really helpful for people who have nothing reserve to expend for the current disaster.
Here I have a site Homeloans.org for the emergency insurance service, please visit our site for more information. -
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