Most people who have purchased a home in the past know that title insurance is one of the largest expenses associated with the closing of a real estate transaction. Naturally, those who choose to refinance their loans wonder if they will have to purchase title insurance again. While the short answer is yes, the news is not all bad. For one, you only need to worry about purchasing a new lender’s policy. Your owner’s policy will remain active for as long as you own the property. The other good news is that even the cost of refinancing lender’s title insurance in New York is usually much cheaper.
In this article, ANSTitle explains how title insurance rates are determined in the state of New York and then we’ll also go over the rate discounts applicable to refinance loans. We will also discuss what to look for when choosing a New York title insurance company.
Title Insurance Governance in New York State
The title insurance rates in New York are determined by the Title Insurance Rate Service Association (TIRSA). The organization is licensed by the New York State Department of Financial Services and all major title insurance companies in the state are members. TIRSA proposes the rates, which then need to be approved by the Department. Once approved, the rates are implemented by all TIRSA member title agents. This means that you don’t need to worry about shopping for the best price as the costs will be the same regardless of which provider is issuing your title insurance policy. Â
The Cost of Refinance Title Insurance
As we mentioned at the beginning of the article, refinance title insurance rates are lower than the rates for new purchase loans. In the state of New York, TIRSA sets the rates for policies in an amount of up to $475,000 at 50% of the applicable bracketed rate for a new mortgage. Loan policies for amounts greater than $475,000 are priced at 70% of the applicable bracketed rate. The brackets are based on the amount of insurance needed, which in turn equals the mortgage loan amount.
It is important to mention that these refinance rates are contingent on the existing policy or mortgage not being older than ten years.
Let’s look at an example of how the lender’s policy rate for a refinance loan of $100,000 would be calculated:
Loan Amount Brackets    Rate             Calculation       Subtotals
First $35,000                $284 flat rate                         $284
$35,001 to $50,000Â Â Â Â Â Â Â Â Â Â $6.28 per $1,000Â Â Â Â 15 x $6.28Â Â Â Â Â Â Â Â $94.20
$50,001 to $100,000Â Â Â Â Â Â Â Â $3.90 per $1,000Â Â Â Â Â 50 x $3.90Â Â Â Â Â Â Â Â $195
Total bracketed rate for a new mortgage                            $573.20
50% refinance discount                          $573.20 x 50%    $286.60
If the math seems a little too complex, don’t worry. There are a number of online title insurance calculators that can help you estimate the cost of refinance rates. Better yet, you can contact our ANSTitle agents for an exact title insurance quote for your NY property. Â
Additional Refinance Credits
TIRSA provides additional refinance policy discounts for residential one- to four-family properties. The discount rate depends on whether you are refinancing with your existing or a new lender.
Same Borrower and Same Lender
In this scenario, the property owner is looking to refinance their mortgage with their existing lender. According to TIRSA’s guidelines, the title insurance premium should be 70% of the applicable refinance rate. In other words, you get a 30% discount on the regular rate.
To continue our example with the $100,000 refinance loan from above, the rate in this scenario would be $286.60 x 70%, or $200.62.
Same Borrower and Different Lender
If the property owner is looking to refinance their mortgage with a new lender, the discount is slightly lower. The rate in this scenario is defined as 85% of the applicable refinance rate, or only a 15% discount.
A $100,000 refinance loan from a new lender would end up costing you $243.61 (the bracketed refinance rate of $286.60 x 85%).
There are several requirements to qualify for these additional refinance rate discounts:
- the property must be owner-occupied;
- the original loan and the new loan must be held by the same person;
- the new loan is a refinance of an existing loan;
- the new loan policy is applied for while owning the property;
- some or all of the same people who executed the original loan must execute the new loan and there won’t be any new persons in the loan transaction;
- the new loan policy is for the same or some of the same property without any new additions.
The ten-year limit for the original loan we mentioned earlier, however, is waived for property owners who meet the above requirements. Â
Selecting a Title Insurance Agent
You may wonder if all title insurance companies in New York charge the same rates, then how one could decide which agent to use. Below are a few things that you should consider when selecting a title insurance provider.
- Licensure – all title insurance agents in New York must be licensed by the Department of Financial Services. DFS maintains a list of all licensed title insurers on their website so it would be a good idea to check whether the provider you selected is included.
- TIRSA membership – you may also want to check that your title insurance agent is a member of the Title Insurance Rate Service Association. As we mentioned earlier, the organization sets the rates, rules, and policy descriptions so working with a member will give you peace of mind.
- Reputation/testimonials – just like when hiring any other professional, it would be wise to check your title insurance agent’s online reviews and testimonials from existing customers. If you ever have to rely on your agent to resolve a claim against your property, you would want someone capable of protecting your interests.
- Extra perks offered – while policy rebates are banned in New York, some title agents have found other creative ways to attract customers, such as offering discounts on the title research fee, commission rebates, and more. You may want to consider these offerings before selecting a title insurer. Â
Conclusion
If you’re searching for refinance title insurance or have questions about the refinance credits available in New York, give us a call. ANSTitle has over 50 years of experience in transactional real estate and has helped thousands of customers with title insurance in New York, New Jersey, and other states.
