Title Insurance

Before closing on a mortgage, a title company searches public records to verify that the seller has clear ownership and that no outstanding claims, liens, or easements affect the property. Title insurance protects against issues that the search may not uncover, such as forged documents, unknown heirs, or filing errors.

There are two types of title insurance: a lender's policy (required by the lender to protect their investment) and an owner's policy (optional but recommended to protect the buyer). The lender's policy covers the loan amount, while the owner's policy covers the purchase price. Costs vary by state but typically run from $500 to $3,500.

When refinancing, you will need a new lender's title policy because you are taking out a new loan. However, many title companies offer a refinance discount (sometimes called a reissue rate) if you can provide the original title policy. This can reduce the cost by 40% to 60%. Ask your title company about reissue rates before closing.