Do You Need Title Insurance on a Refinance?

The short answer: yes

When you refinance, your lender will require a new lender's (mortgagee) title policy. Borrowers are often surprised by this: you already paid for title insurance when you bought the home, so why again? The answer is in how the lender's policy works.

Why the old policy does not carry over

A lender's title policy insures a specific loan and a specific lien. It protects the lender that made that loan, in the priority position that loan held, up to its balance. When you refinance, the old loan is paid off and released, and a brand-new loan and mortgage take its place. The old lender's policy ended along with the old loan it was attached to. The new lender is making a new loan secured by a new mortgage, and it needs its own policy insuring that loan and its lien position. There is no way to transfer the old lender's policy to the new loan, because it was never a policy about the property in general; it was a policy about a loan that no longer exists.

What the new lender's policy protects

The new policy protects the new lender's lien: specifically, that the new mortgage is a valid lien in the priority position the lender expects. Between your original purchase and the refinance, things can attach to a property's title that affect priority: tax liens, contractor or judgment liens, a second mortgage or home-equity line, code-enforcement liens, or recording errors. A fresh title search and the new lender's policy confirm and insure that the refinance lender steps into the priority it is relying on, free of intervening defects, and back that up with a defense and indemnity obligation up to the loan amount.

Your owner's policy continues

Here is the reassuring part. The owner's policy you bought when you purchased the home is not affected by a refinance. It was issued for your benefit, for the purchase price, and it generally continues for as long as you hold an interest in the property, through any number of refinances. You do not need to, and generally cannot, replace it on a refinance, because it never went away. Refinancing does not require new owner's coverage; it requires new lender's coverage. For a primer on the difference between the two policies, see What an Owner's Title Policy Covers.

The premium need not start from scratch

The good news for refinancing borrowers is that Florida's promulgated rate structure recognizes that this property has been insured before. Where the conditions in the state rules are met, a reissue rate applies a reduced premium because a prior policy exists, and a substitution-loan rate can apply when a refinance meets its eligibility conditions. These can meaningfully lower the lender's premium on a refinance compared with the original rate. Eligibility depends on specifics, so it is worth confirming rather than assuming. The mechanics (and how to check whether your refinance qualifies) are covered in Reissue and Substitution Rates: How Refinancing Can Lower Your Title Premium.

Estimating the cost

Because title premiums are promulgated (set by the state), the rate does not vary from agency to agency, but whether reissue or substitution applies, plus the documentary stamp tax on the new note and the intangible tax on the new mortgage, all affect the total. The cleanest way to see your number is to run it. Our Florida title and closing-cost calculator handles purchase and refinance and lets you indicate a prior policy, and you can contact Union Title Services to confirm reissue or substitution eligibility and get a binding figure for your refinance.