There are plenty of reasons homeowners may choose to refinance. Perhaps you’re looking for a lower interest rate on your home. Or, perhaps refinancing your home is your chance to take on a remodeling project and invest in your property. Whatever your reasons for refinancing, the process can in many ways be just as involved as your original home purchase. One of the most common questions homeowners face when refinancing is whether title insurance is necessary.


At Liberty Title in Minnesota, we’re committed to helping homeowners through the process. Here’s what you need to know about title insurance when refinancing your home.


Understanding Title Insurance

Title insurance protects homeowners and lenders from problems with the title of their home. It can protect you from having to pay for legal fees if a problem related to your title ends up in court. It can also cover the costs of the claim due to undisclosed spouses or heirs, problems with a will, and other errors with the title. Tax liens, mechanic’s liens, and other issues that might arise will also be covered. As with the initial mortgage, title insurance is figured into the closing costs of a loan.


Title insurance also protects against these problems:

●        Fraud

●        Improperly filed paperwork

●        Claims to the property


Does the Lender Require Title Insurance?

A lender will always require you to purchase title insurance. This protects their financial interest in the property and makes sure their investment is secure. If there was a problem that interfered with your ability to repay your loan, the property would belong to the lender. Title insurance ensures the lender would be able to sell the property if this were to occur. A problem with the title would serve as a barrier to the sale of the home if they needed to sell it. In other words, title insurance is the lender’s way of making sure the title is clean so they could go ahead with a sale.


What About Buyer’s Title Insurance?

We’ve established the reason you need lender’s insurance. But you also have the opportunity to purchase buyer’s title insurance during the refinancing process. You may be thinking to yourself that you already own the property so there’s no chance of a problem with the title. However, title problems can arise down the road even after a property has been under your ownership. Fortunately, if you initially purchased owner’s title insurance, it should cover you as long as you own the property. That means no matter how many times you refinance your home, your investment is protected.


Minnesota Title Insurance Protection

If you’re refinancing your home, you may have plenty of questions. That’s where our team of title insurance agents at Liberty Title come in. We’ll walk you through the process whether you’re refinancing or selling your home and answer any questions that should arise. Speak with our agents to discuss your title insurance questions by calling us at 763.494.0340, or contact us to learn more about how we can help.