Although koHResources is a commercial real estate entity, as a licensed New York real estate broker who previously sold residential homes, I think this information, with only slight deviation, applies across the board when it comes to refinancing: please note, in many cases, the commercial lender insists on ordering title and the appraisal.
Title insurance is at the top of the list as far as closing costs are concerned when refinancing a property. The fee is usually 0.5 to 1.5% of your loan amount, so it can add up to a significant amount. If you borrowed $300,000, the amount you could pay would be $3000-$3500, not including document-preparation fees.
Often homes, or any property for that matter, may have gone through several ownerships, and a weak link could emerge at any point in that chain. For example, someone along the way may have forged a signature upon title transference, or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems, subject to the terms and conditions of the policy.
So there’s no way to get out of paying for title insurance. Lenders require you to purchase a new policy when you refinance, since your current one is only in effect for the duration of that mortgage. If it has been less than 10 years since you got your original loan, contact your title search company and ask if you can have your title reissued (also known as a special refinance or substitution rate). This can cut the price by 40% to 70%, depending on whether you use the same lender or a new one and how long it’s been since you last had a title search on the property.
Inquire as to any other discounts they might provide, such as reduced fees for seniors. You can also ask a title search provider to perform a “quick” search, which mostly tracks new liens and problems that may have occurred since the most recent title search. A quick search could be about 25%-40% cheaper than getting a new policy. Finally, if the lender permits, try buying directly from a title insurance company. You can find a list of local independent title insurance companies at American Land Title Association (homeclosing101.org). Or see if your state is one of the 31 covered by new online title insurer EnTitleDirect.com, which sells directly to residential and commercial consumers. I am currently awaiting the list of states from them and will pass it on upon receipt. As of this posting EnTitle does not offer services in New York.
