You will not be required to obtain a new Owner’s Title policy when you refinance your mortgage, but you will be required to obtain a new “Lender’s policy” of title insurance, naming the lender as the insured. The Lender’s Policy of title insurance protects the lender for the amount of their mortgage loan. The new policy is required because any number of things could have happened to the property since the time of the last title search. Such events as tax liens, liens for unpaid child support, or mechanic’s liens can occur without the homeowner even being aware these liens exist. You may feel certain that nothing has changed since you originally purchased or refinanced your property, but the lender will have to have assurance from the title company that everything has been done to certify that the loan is fully protected. It is the lender who requires the new loan policy of title insurance and in order for a title company to issue this new policy, a new title search must be performed.
How Often Can I Refinance my Mortgage?
You can refinance your mortgage as often as you like, however, many lenders require that you have lived in the property (“seasoned”) the property for at least one year before granting a new loan. Lenders may also require that you hold a loan one year before refinancing to a new loan. You will want to carefully read the “Prepayment Clause” in your mortgage documents, to determine if you will have a penalty to pay if you pay off the old loan before the maturity or due date of the loan.
You may qualify for a discounted rate or “re-issue” rate on this new title insurance policy if your previous policy was issued in the last 2-5 years. Ask your title company or escrow officer if you qualify.