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RED BARN REALTY

990 Somerset St.
Watchung, NJ 07069
(908) 754-0111

Thank you for visiting today. If this is your first visit, please take your time and look around. We have plenty of information and resources available to you. If you are a return visitor, thank you. We would love to hear from you, so we may tell you how we can serve all your real estate needs.

Red Barn Realty has been in business and serving the Watchung/Warren Communites and surrounding towns since 2001. Broker-Owner, Carl Porambo is a 17 year real estate professional who undertands all facets of the real estate business. Carl's local and regional knowledge of the market is beneficial to buyers and sellers alike.

Carl grew up in Scotch Plains, has lived in Basking Ridge for the past 15 years and operates his Brokerage out of Watchung for the past 10 years. His local knowledge is your advantage!

In addition, all of our Red Barn Realty agents live and work throughout Somerset, Morris, Hunterdon and Middlesex Counties of NJ. Combined, our firm has nearly 20 years of experience in real estate. Please feel free to connect with us to inquire about any and all of your real estate needs.

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Title Insurance When Refinancing Your Loan

Lower interest rates have motivated you to refinance your home loan. The lower rate may save you a tremendous amount of money over the life of the loan, but you should also expect to pay the lender the typical closing costs associated with any new loan, including service fees, points, title insurance protection and other expenses.

Why do I need to purchase a new title insurance policy on a refinanced loan?

To the lender, a refinance loan is no different than any other home loan. So, your lender will want to insure that their new loan is protected by title insurance, just as the original lender required. Therefore, when you refinance you are buying a title policy to protect your lender.

Why does a Lender need title insurance?

Most lenders generate loans and then immediately sell those loans to secondary market investors, such as FannieMae.

FannieMae, in order to protect its security interest in the loan, requires title insurance coverage. Even those lenders who keep original loans in their portfolio are wise to get a lenders policy to protect their investment against title related defects.

When I purchased my home, didn’t I also buy a lender’s policy?

Perhaps. Who pays for the lender’s policy on a purchase loan varies regionally and by the terms of individual contracts.

However, even if you did buy a lender’s policy when you purchased your home, the lender’s policy remains in force only during the life of the loan that was insured. If you refinance, the old loan is paid off (the “life” of the loan expires) and a new loan is issued for which the lender will require a new title insurance policy.

What about my original title insurance policy?

When you bought your home, you purchased a Homeowners title policy. The Homeowners’ policy stays in force as long as you or your heirs own the home. When you refinance, your lender will often require that you purchase a new lender’s policy to protect their new security interest in the property. Thus, you are buying a policy to protect your lender, not a new Homeowner’s policy.

What could possibly have happened since I purchased my home which warrants a new lender’s policy?

Since the time that the original loan was made, you may have taken out a second trust deed on the house or had mechanic’s liens, child support liens or legal judgments recorded against you - events that could result in serious financial losses to an unprotected lender. Regardless if it has been only 6 months or less since you purchased or refinanced your home, a myriad of title defects could have occurred. While you may not have any title defects, many Homeowners do. The only way for a lender to adequately protect itself is to get a new lender’s policy each time you purchase or refinance your home.

Are there any discounts available for title insurance on a refinance transaction?

Yes. Title companies offer a refinance transaction discount or a short-term rate. Discounts may also be available if you use the same lender for your refinance loan and your original loan. Be sure to ask your title company how they can save you money.

Article by CLTA

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