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ENTITLE DIRECT > Title Insurance Knowledge > Weighing costs, including title insurance, important when contemplating refinancing a home

Weighing costs, including title insurance, important when contemplating refinancing a home

02/09/2010
One reason a person may consider refinancing their home is to save money on their mortgage payments. However, a recent report from Ohio's Dayton Daily News notes that consumers should consider the costs involved with refinancing.

The article from the paper relied on a number of mortgage professionals, including Kay Sandusky, who works for Citizens National Bank of Southwestern Ohio. Sandusky said that reducing how much a person pays in interest may be one motivating factor in considering a home refinance.

"If you can save half a point or more on your interest rate, that can be a good indicator to refinance," Sandusky said.

Though people may end up saving on things like their interest rate, there are other costs associated with refinancing a home. Sandusky said that the monthly savings refinancing could bring should be offset by the initial costs of doing so.

Furthermore, consumers should make sure they consider how long they plan on staying in the home. Kim Penner, who works for Union Savings Bank, said that a person who only plans on living in a home for three to five years may not want to refinance.

Penner also said that consumers have to consider the length of the loan into which they are refinancing. The sooner a person pays off a loan, the more they could save in interest payments.

"The difference in interest could be $40,000, $50,000, $60,000," Penner told the paper.

Another cost not brought up by the paper is the fact that consumers who refinance are going to have to pay for lender title insurance. Title insurance acts as a guarantee for the lender's investment in the case that the property's ownership comes into question.

There are a variety of reasons why a property's ownership may be in jeopardy, including things like divorce decrees, tax liens or fraudulent sales documents. Through the title insurance process, official documents are searched in order to make sure there are not any potential outstanding claims on the home or property.

Along with the title search, the insurance will provide the lender legal protection in addition to acting as a safeguard of their investment. Consumers may also consider buying title insurance on in order to protect themselves from similar threats to ownership.
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