Refinances on the Rise
Low interest rates, a good job market, and the rise in home equity helped create a mini refinance boom in the first quarter of 2019. Refinancing was up 39% during the last week in March and hit its highest point since January 2016. Although interest rates are starting to tick back up slightly, the Fed recently announced that they don’t plan to raise rates again in 2019, unless the economy “shifts.”
In this type of environment, it’s a good bet that some homeowners will continue to look into refinancing in the near future. Although refinancing can lower the amount of money you’ll owe over the life of your loan, it comes with some upfront closings costs—including title insurance. The good news is, depending on the state you live in, you may be eligible for a discounted rate. But, it’s important to make sure your title insurance provider is actually offering the lowest applicable premium.
Ask If You’re Getting the “Reissue or Refinance Rate”
The availability of discounted title insurance rates varies by state, but if you’ve purchased or refinanced a home in the recent past you could be eligible. This can result in a significant reduction in the amount you pay for title insurance—up to 40-60%. Here’s how it works in New York:
For Example with Spruce
|$400,000 Loan Amount||New York City|
|Lender’s Policy Premium Amount||$1623|
|Automatic Refinance Discount (15%)||$1411|
|Additional Reissue Rate Discount (50%)||$706|
- 15% discount is automatically applied to refinance quotes in New York
- Additional 50% discount is given off the 15% discount ($1411 above), if you purchased or refinanced within the last 10 years in New York. Other conditions may apply.
In this example, the additional reissue rate discount would save you $705 in closing costs! So, It’s a good idea to double check with your title company to see if they’re providing the lowest possible refinance rate in your area.
Why is the Refinance Rate Cheaper?
If you’ve lived in the house for ten years or less, it simply makes the title search process easier. There are fewer things that could have happened to the property: fewer instances of missing interests, transfers of ownership, etc. On a purchase transaction, the title search generally goes back a minimum of 30+ years on the chain of title—which requires a more thorough examination of the public records.
Less work for the title search provider equals less work for the title company, which means that the product should be cheaper for you!
Make Sure You Have a Copy of Your Original Policy
In many states, in order to qualify for the reissue rate, you’ll need to supply a copy of your original owner’s title insurance policy––from when you purchased the property. If you can’t find it, you can most likely get a copy from one of these people who helped with your original purchase transaction:
- Title Agent
- Real Estate Attorney
- Title Underwriter