Does a Title Company Need to be Involved in a Refinance?
When it comes to refinancing your home, it’s easy to focus on interest rates and monthly payments, but have you considered the role your title company plays in the process? Title companies are usually associated with the purchase of a home, but they are just as important in the refinance process.
Why Is a Title Company Needed for a Refinance?
A refinance replaces your existing mortgage with a new one, usually in order to lower your interest rate, change loan terms or tap into home equity. Even though you already own the home, the lender still needs assurance that their investment is protected. That’s where the title company comes in.
The Role of the Title Company
Like it does in the initial purchase, the title company will conduct a title search to ensure there are no new liens, claims or other issues with the property. They’ll check for unpaid taxes, contractor liens or judgments that could impact the lender’s interest in the home.
Most lenders require a lender’s title insurance policy for a refinance, which protects them from losses due to title defects. While you likely purchased owner’s title insurance when you bought the home, a new lender’s policy is required with each refinance.
The title company prepares and organizes the closing documents, including the new mortgage and deed of trust. They often host or oversee the closing appointment, where you sign all required paperwork for your new loan.
Title companies also handle the disbursement of funds, ensuring the old mortgage is paid off, new loan proceeds are properly distributed and all fees (such as taxes and insurance premiums) are paid.
After closing, the title company ensures the new mortgage is recorded with the county recorder’s office, officially documenting the lender’s lien against your property.
For more information about how Clear Title would be involved in the refinancing of your mortgage, please contact our offices in downtown Pensacola (850) 361-4029, Pace (850) 994-3838 or Pine Forest (850) 202-8518. You can also reach us online and one of our professionals will be happy to speak with you.
