The HomeBuyer's Guide to Savings

The affiliate or in-house title company works exclusively for and shares profits with a real estate broker/agent, builder, or mortgage lender - sometimes under the same roof or corporate umbrella - the one stop shop.

The problem is 35%-50% of the title insurance premium and other title related fees that you pay go to the individuals or company that referred you to them in the form of a quarterly profit-sharing distribution.

An independent title company can offer you better service and eliminate junk fees because they don't have to share profits with any third-party players. Before getting caught up in the so-called convenience of using the One-Stop-Shop, take a close look at what it’s going to cost you.

Title insurance is an indemnity insurance that protects property owners (and their mortgage lender) against a financial loss in the event that a lien or judgment created by a previous owner should pop-up during the time that you own the property. When you purchase an owner’s title insurance policy, you’re covered for claims up to the purchase price of the property. An owner’s title insurance policy would also cover litigation costs for any covered claim, whether or not the claim is legitimate.

Title companies wear several different hats during the course of a real estate transaction. Once you have a signed agreement to buy real estate, we start by completing a title search that goes back at least 60 years to make sure that the sellers are the rightful owners of the property and that they (along with the owners before them) haven’t created any liens or judgments that would prevent the buyer from owning the property free and clear of all defects.

We’re also responsible for coordinating the real estate settlement process with the buyers, sellers, mortgage lender, and real estate agents. Lastly, we conduct final settlement, and we assure that all of the seller’s financial obligations that could create a lien against the property are satisfied, the mortgage documents are signed, notarized, and recorded according to the lender’s instructions, and all taxes and other payments are dispersed according to the terms outlined on the ALTA Settlement Statement.

It’s important to remember that federal law gives homebuyers/borrowers the right to choose their own title company

Although you are not required by law to purchase an owner’s title insurance policy, we recommend that you do so. When you weigh the benefits of the owner’s policy, along with the fact that it’s a one-time premium paid at settlement and the policy remains in-force for as long as you and or your heirs own the property, it's well worth the peace of mind.

Keep in mind, if you’re going to have a mortgage, your lender will require you to obtain a lender’s title insurance policy to protect their interests against defects in title. If you're financing 80% or more of the purchase price, the lender’s title insurance policy accounts for the majority of the cost of the title insurance, making the additional premium for the owner’s policy just a few hundred dollars.

If someone tells you that title insurance costs the same everywhere, don’t believe them! Although title insurance premiums are filed with the state insurance commission, and may not be discounted, there are non-mandatory miscellaneous title fees that can add $1,000 or more to the cost of your title insurance, depending on the provider.