What happens to title insurance when you pay down a mortgage?

What happens to title insurance when you pay down a mortgage?

Major mortgage investors Fannie Mae and Freddie Mac, who frequently buy home loans from lenders after closing, require the lender’s title policy coverage to be at least as much as the mortgage principal. As you pay down your mortgage principal, the lender’s coverage declines accordingly.

Do I need title insurance when refinancing my home?

Yes, you will need to buy a new lender’s title insurance policy during the refinancing process, even if you use the same lender for your new loan. However, your current owner’s policy – if you bought one when you purchased the home – will stay in effect after the refinance since you still own the same home.

What does title insurance cover on a mortgage?

If the mortgage lender stands to lose money, the lender’s policy will provide the coverage. There are four types of title issues that title insurance usually covers: Unknown liens – When a previous owner used the property as security on a debt that hasn’t been repaid. Or, when back property taxes or child support payments remain outstanding

Do I need title insurance for my lender?

You must purchase title insurance for your lender. The lender’s title policy is sometimes called a “loan title policy” and it functions in much the same way as your owner’s title policy. A title search is performed to identify encumbrances and liens and any unsatisfied claims are addressed prior to closing.