Why Do I Need to Purchase a New Lender’s Policy?
The original lender’s title insurance policy protects the lender’s interest on the original loan. With the new refinanced loan, the original loan will be paid off, and the new lender will require protection of its interest for the new loan. From the lender’s stand point. a refinanced loan is no different than any other mortgage loan. In addition, if the loan is sold in the secondary market. investors like Fannie Mae will require the security of title insurance on the property.
The good news is that in many circumstances title companies offer discounts of a short-term rate on lender’s policies for refinance. If your refinanced loan is with the same lender as your original loan. your lender may provide additional discounts.