Refinancing? What You Need to Know About Title Insurance

Refinancing your mortgage can save you money through lower interest rates, reduced monthly payments, or the ability to tap into your home's equity. But when you receive the closing cost estimates for your refinance, you might be surprised to see title insurance fees listed—again.

Many homeowners ask: "I already bought title insurance when I purchased my home. Why do I need to pay for it again when refinancing?" It's a fair question, and the answer comes down to how title insurance works and what it protects.

At Prospect Title, we've handled thousands of refinance transactions across Utah over our 59 years in business. We understand the confusion around title insurance for refinances and the frustration of paying closing costs when you're trying to save money. This guide will explain exactly why you need title insurance when refinancing, what it costs in Utah, what discounts you can expect, and what the title company actually does during your refinance.

Why Do I Need Title Insurance When Refinancing?

When you refinance, you're not simply modifying your existing mortgage. You're taking out a completely new loan that pays off the old one. This new loan needs its own protection, which is why your lender requires a new lender's title insurance policy.

Your Original Lender's Policy Terminates

When you purchased your home, your lender required you to buy a lender's title insurance policy that protected their mortgage loan. That policy remains in effect only for the life of that specific loan. Once you pay off that original mortgage with the proceeds from your refinance, the original lender's policy terminates.

Your new lender is making a new loan secured by your property. They need their own title insurance policy to protect that new loan. Even if you're refinancing with the same lender, the new loan is a separate transaction that requires a new policy.

Title Issues Can Arise After Your Purchase

While you've owned the property, new issues could have affected the title without your knowledge. These might include:

• Judgment liens: If you were sued and lost, the creditor may have recorded a judgment lien against your property
• Tax liens: Federal or state tax liens for unpaid taxes
• Mechanic's liens: From contractors who claim you didn't pay for work they performed
• HOA liens: If you fell behind on homeowners association dues
• Child support or divorce-related liens: Court-ordered liens related to family law matters

Any of these liens could take priority over your new lender's mortgage if they're not discovered and addressed. The title search during refinancing uncovers these issues so they can be resolved before your new loan closes.

Your Owner's Policy Continues—No New Owner's Policy Needed

Here's the good news: your original owner's title insurance policy continues to protect you as long as you own the property. You don't need to purchase a new owner's policy when you refinance. Only a new lender's policy is required.

This is an important distinction because owner's policies are typically more expensive than lender's policies. Your refinance closing costs will include only the lender's policy premium, not a full owner's policy.

What Are Reissue Rates and How Much Can I Save?

Because the title was already examined when you purchased the property, title companies offer discounted "reissue rates" for refinance transactions. These discounts recognize that less work is required to update a recent title search than to conduct a completely new one from scratch.

How Reissue Rates Work in Utah

In Utah, reissue rates typically apply if you're refinancing within 5-10 years of your original purchase (the exact timeframe varies by title company and underwriter). The discount can range from 30% to 50% off the standard premium.

For example, if the standard lender's policy premium for your loan amount would be $800, you might pay only $400-$560 with a reissue rate. The exact discount depends on:

• How recently you purchased or last refinanced
• Whether the same title underwriter issued your previous policy
• Your title company's reissue rate schedule
• The complexity of updating the title search

What You Need to Qualify for a Reissue Rate

To receive a reissue discount, you'll typically need to provide:

• A copy of your previous title insurance policy
• The policy number from your original transaction
• Proof that the title insurance is from within the qualifying timeframe

Your title company may be able to locate this information in their records if you used the same company for your purchase. If you used a different title company, you may need to request a copy of your original policy from that company or find it in your closing documents.

At Prospect Title, we maintain thorough records of past transactions and can often identify whether you qualify for a reissue rate even if you don't have your original policy readily available.

When Reissue Rates Don't Apply

You might not qualify for a reissue discount if:

• Your purchase or last refinance was more than 10 years ago
• You can't provide documentation of your previous title insurance
• Significant title issues have arisen that require extensive additional searching
• The property has changed significantly (subdivided, combined with adjacent parcels, etc.)

Even without a reissue discount, lender's title insurance for refinances is generally less expensive than for purchases because the coverage amount is based on your loan amount rather than the full property value (which has likely appreciated).

*Rates are examples and vary by title company, underwriter, and specific circumstances.

What Does the Title Company Do During a Refinance?

Even though you're not buying or selling the property, the title company plays a crucial role in your refinance transaction. Understanding what happens behind the scenes can help you appreciate why these services are necessary and what you're paying for.

Updated Title Search

The title company conducts a new search of public records to identify anything that has happened since you purchased the property. This includes:

• Liens recorded against the property or owners
• Judgments against you that could attach to the property
• Tax liens or assessments
• Changes in ownership (such as adding or removing someone from title due to marriage, divorce, or death)
• Easements or restrictions recorded during your ownership
• Pending bankruptcies or foreclosures

In Utah, this search involves checking county recorder records, court records, federal tax lien records, and sometimes HOA records. While your ownership hasn't changed, new encumbrances could have attached without your knowledge.

Title Commitment and Clearance Requirements

The title company issues a commitment to insure, listing what will be covered by the new lender's policy and what requirements must be met before closing. Common requirements include:

• Payoff of the existing mortgage (your title company coordinates this)
• Release or satisfaction of any other liens
• Resolution of any title issues discovered in the search
• Proper execution and recording of the new deed of trust

The title company ensures all requirements are satisfied before the new loan can close.

Escrow and Closing Services

In Utah, the title company typically serves as the escrow agent for refinance transactions, handling:

• Coordinating with your lender to receive loan funds
• Obtaining a payoff statement from your current lender
• Preparing closing documents for your signature
• Facilitating the closing (in person, via mobile notary, or through remote online notarization)
• Disbursing funds to pay off your old loan and any other liens
• Recording the new deed of trust with the county recorder
• Issuing the final lender's title insurance policy

This coordination ensures that your old loan is paid off, the new loan is properly secured, and all funds are distributed correctly. At Prospect Title, we handle these details so your refinance closes smoothly without surprises.

Recording and Policy Issuance

After closing, the title company records your new deed of trust with the county recorder. In Utah, this recording establishes your new lender's lien priority. Once recording is complete and the title company confirms the old mortgage has been released, they issue the final lender's title insurance policy to your new lender.

How Much Does a Refinance Cost in Utah?

Title-related costs are only part of your total refinance closing costs. Understanding the full picture helps you determine if refinancing makes financial sense.

Title Insurance Premium

As discussed, lender's title insurance for a refinance typically costs $300-$800 in Utah depending on your loan amount and whether you qualify for reissue rates. This is significantly less than the combined owner's and lender's policies you paid when purchasing.

Title Company Fees

Beyond the insurance premium, you'll pay fees for the title company's services:

• Title search/examination fee: $200-$400 for updating the title search
• Escrow/closing fee: $400-$600 for managing the transaction and closing
• Document preparation: $100-$200 for preparing necessary documents

Total title company charges (including insurance) typically run $1,000-$1,800 for Utah refinances.

Recording Fees

Counties charge recording fees for the new deed of trust and release of the old mortgage. In Utah, recording fees are typically $50-$75 per document, so expect $100-$150 in recording costs.

Other Closing Costs

Beyond title-related costs, your refinance will include:

• Lender fees: Origination fees, underwriting fees, processing fees (varies by lender)
• Appraisal: $450-$600 for a standard home appraisal in Utah
• Credit report: $25-$50
• Prepaid interest: Interest from your closing date to the end of the month
• Escrow account adjustment: If you have an escrow account, there may be adjustments

Total refinance closing costs in Utah typically range from $3,000 to $6,000 depending on your loan amount and lender. Many borrowers choose to roll these costs into the new loan rather than paying them out of pocket.

What Title Issues Commonly Arise During Refinances?

The title search during a refinance often uncovers issues that must be resolved before closing. Being aware of common problems helps you address them proactively.

Unreleased Home Equity Lines of Credit

This is the most common refinance title issue. If you previously had a HELOC that you paid off but never formally closed, the lien may still appear on title. Even if the balance is zero, the lien must be released before refinancing.

Contact the HELOC lender to request a release of lien. This process can take several weeks, so start early if you know you have a paid-off HELOC.

Judgment Liens

If you've been sued and a judgment was entered against you, the creditor may have recorded a judgment lien. In Utah, judgment liens attach to all real property you own in the county where the judgment is recorded.

Even if the judgment is old or you believe it's satisfied, it must be formally released. If you dispute the judgment or believe it should have expired, you'll need to work with an attorney to resolve it.

Tax Liens

Federal tax liens (IRS) and state tax liens (Utah State Tax Commission) appear in the title search. These liens can complicate refinancing, though they don't always prevent it. In some cases, the IRS will subordinate their lien to allow the refinance if it benefits their collection efforts.

Divorce-Related Issues

If you went through a divorce since purchasing the property, your title company will need documentation showing how the property was allocated. Even if your divorce decree awarded you the property, your ex-spouse's name might still be on title. You'll need a quitclaim deed from your ex-spouse or evidence that their interest was properly terminated in the divorce.

Deceased Co-Owner Issues

If you owned the property jointly with someone who has since died, the title company will need documentation showing how title passed. For joint tenancy with rights of survivorship, an affidavit of survivorship is typically sufficient. For tenancy in common, probate documents may be required.

Unreported Name Changes

If you changed your name since purchasing (due to marriage, divorce, or otherwise) but your loan application shows your new name, the title company will need documentation connecting your old and new names. A marriage certificate, divorce decree, or court order for name change typically suffices.

Does My Refinance Type Affect Title Insurance Requirements?

All refinances require lender's title insurance, but certain types of refinances have unique considerations.

Rate-and-Term Refinance

This is the standard refinance where you're replacing your existing mortgage with a new one to change the rate or term. Title insurance requirements are straightforward—a new lender's policy with standard title search and clearance requirements.

Cash-Out Refinance

A cash-out refinance, where you borrow more than you owe and take the difference in cash, follows the same title insurance process. Your lender's policy will be for the higher loan amount, which slightly increases the premium. Otherwise, the title work is identical to a rate-and-term refinance.

Streamline Refinances (FHA and VA)

FHA Streamline and VA IRRRL (Interest Rate Reduction Refinance Loan) programs are designed for faster, easier refinancing. However, they still require lender's title insurance in Utah. Some lenders may accept limited title updates for these streamline products, potentially reducing costs slightly, but a new policy is still mandatory.

Home Equity Loans and HELOCs

When you take out a home equity loan or HELOC (rather than refinancing your first mortgage), you're adding a second lien rather than replacing your existing mortgage. The home equity lender will require their own lender's title insurance policy, but your original first mortgage policy remains in place.

Title insurance for home equity loans is typically less expensive because the coverage amount is lower (just the home equity loan amount) and these are recognized as second-lien positions.

How Can I Prepare for a Smooth Refinance in Utah?

Taking a few proactive steps before starting your refinance can prevent delays and ensure the title process goes smoothly.

Gather Your Original Closing Documents

Locate your closing documents from when you purchased the property, particularly your title insurance policy. This helps your title company determine if you qualify for reissue rates and provides useful information about your previous title work.

Identify Potential Title Issues

Think through whether anything has happened since you purchased that could affect title:

• Did you take out a HELOC that you later paid off?
• Have you been sued, with a judgment entered against you?
• Do you have any unpaid taxes that could result in liens?
• Did you get divorced and need to remove an ex-spouse from title?
• Did a co-owner pass away?
• Have you changed your name?

Disclosing these situations early gives your title company time to request necessary documents and resolve issues.

Check Your Property Tax Status

In Utah, unpaid property taxes become liens that must be addressed. Check your county's website to verify your property taxes are current. If you're behind, you'll need to bring them current before refinancing.

Review Your HOA Account

If your property is in a homeowners association, verify your dues are current. Unpaid HOA assessments can become liens that complicate refinancing. Contact your HOA to confirm your account is in good standing.

Choose an Experienced Utah Title Company

While your lender may recommend a title company, you generally have the right to choose your own. Select a company with experience in Utah real estate, strong communication, and fair pricing. At Prospect Title, we've handled countless refinance transactions since 1967 and work efficiently to ensure your refinance closes on time. Explore our closing process resources to learn what to expect.

Respond Promptly to Requests

When your title company or lender requests documentation, provide it as quickly as possible. Delays in receiving documents are one of the primary causes of extended closing timelines. Set up email alerts and check your spam folder to ensure you don't miss important requests.

What Happens If I Refinance Multiple Times?

If you refinance several times over the years—perhaps taking advantage of falling interest rates or accessing equity—the title insurance process repeats each time.

Multiple Policies Over Time

Each refinance requires its own new lender's title insurance policy. Your second refinance requires a policy even though you just obtained one for your first refinance. However, as long as each refinance occurs within the reissue rate timeframe (typically 5-10 years), you should continue to receive reissue discounts.

Your Owner's Policy Remains Unchanged

No matter how many times you refinance, your original owner's title insurance policy continues protecting your ownership. You never need to buy a new owner's policy unless you sell the property and then later repurchase it.

The Title Search Gets Easier

If you refinance with the same title company, they already have extensive records about your property and previous title work. This can make the title search and clearance process more efficient. At Prospect Title, we maintain comprehensive files on properties we've handled, which streamlines subsequent transactions.