If you are about to refinance your mortgage, your mortgage lender has or will soon provide you with a Good Faith Estimate (GFE) which will include, among other costs, a line item charge for title insurance.
Although you are required to pay for it, this is "lender’s" title insurance as opposed to the "owner’s" title insurance, which you likely purchased at the time of your original closing.
The lender’s title insurance premium is often the single most costly line item for refinancing homeowners. While it’s the borrower's right to choose a title company, unfortunately, thousands of borrowers are allowing their mortgage lender to choose a settlement company on their behalf.
As a result, they are sometimes paying hundreds of dollars more in title insurance and settlement fees than if they spent a few minutes online shopping among and choosing their own title company.
Some title companies require proof of an existing owner’s title insurance policy less than 10 years old in order to obtain a discount (or Reissue Rate) on the new lender’s title insurance premium, while other title companies provide an Absolute Reissue Rate.
An Absolute Reissue Rate is a discounted rate on the title insurance premium without requiring the homeowner to provide any evidence of existing owner’s title insurance coverage.
For example, Bob purchased his home more than 10 years prior to his current mortgage refinancing and Title Company A, selected by Bob’s lender, charged $1,200 for lender’s title insurance because they require – and Bob could not produce – a copy of an existing owner’s title insurance policy less than 10 years old.
In the alternative, Jane also purchased her home more than 10 years prior to her current mortgage refinancing. However, wisely, Jane compared title charges among local title companies and chose a title company that didn’t require proof of an existing owner’s title insurance policy.
Jane paid $720 compared to Bob’s $1,200 charge for lender’s title insurance.
Federal Title is one of the few title companies in the District of Columbia, Maryland, and Virginia that provides an Absolute Reissue Rate to all its customers.