Home Mortgage Refinancing Procedure: Title Insurance

Title Insurance and Home Mortgage Refinancing -- An Overview

Before you buy, sell, or obtain home mortgage refinancing, you will be dealing with a title search. Even before you do certain improvements you should have a full search done if you have not done so already. This will reveal any easements, ordinances, covenants on the property, or anything that would affect the allowed improvements in your neighborhood.

How Title Searches Work

These searches go backward in time from the most current owner, which is you. This search will reveal whether or not you have the interest in the house to refinance or sell. Sometimes this search reveals problems in the title that drags the homeowner into a courtroom—title insurance protects the homeowner from the costs of defending their rights to the property. The owner’s title insurance covers clear title, errors in recording, covenant restrictions on the land, bad signatures, inconsistencies, encumbrances, liens, and forgeries/fraud that were not found in the title search.

Finding Title Insurance Coverage During the Home Mortgage Refinancing Process

All types of real estate are eligible for coverage whether residential, undeveloped land, mobile homes, time-share, commercial properties of all kinds, etc. Within the limited title search report will be a history of mortgages on the property as well as deeds, any refinance, trades, and transfers. Marriages and divorces will be on the history because they affect the title, as will deaths. A lender knows by this history of your property whether or not you have the right to refinance the loan.

Property Histories

Because of all the detailed recordkeeping involved, most property histories only go back to 1985, but could go back much further if necessary. The full coverage report is more for a sale of a home, and includes the usual search for liens, easements ordinances, covenants, bankruptcies, etc., as well as liens against the buyer. While this is not necessary for the refinance itself, if you are purchasing title insurance it may be required.

The Importance of Title Insurance in Home Mortgage Refinancing

Most experts say title insurance is one of the best insurance policies you can buy. If you are selling, buying, refinancing, or putting in a new deck sometime in the future, protect yourself from title problems. Remember that the search will show any easements or ordinances you are in danger of violating or encroaching upon, and will uncover and other title issues for refinancing. Once you have clear title, get that insurance.