First Time Home Buyer's Guide

to Title Insurance & Final Settlement

You don’t need help answering fluffy questions like what kind of neighborhood do you want, or what’s the difference between an adjustable rate mortgage and a fixed rate mortgage? But if you can grasp these 5 points, you'll be better prepared going into the homebuying process than the last generation was.

5 Things Our Parents Wish They Knew

1. The Buyer Chooses the Settlement Company

And those who shop around can save a bundle!

As many Pennsylvania homebuyers are starting to realize, you have the right to shop around and designate which settlement/title insurance company you want to use. It's the law. It's important to remember you're not obligated to use your lender's or real estate agent's in-house service providers and should take the time to compare quotes and services offered before agreeing to hire anyone.

Quick Facts:

Services I can shop around for...and WHEN?

There are some services you can shop around for or negotiate, others will be designated for you.

Shop around for these:

Mortgage lender
Title insurance/settlement services
Homeowner's insurance

These are non-negotiable:

Lender's title insurance premium and fees for any required policy endorsements
Appraisal fee
Credit report fee

We recommend shopping for these services early on in the process, so that when you find the house you want, everything is in place.

Who Orders My Title Insurance?

You're paying for it, so the decision is yours. It's not up to the seller, the real estate broker/agent or the lender. Once you’ve had an opportunity to compare the fees and services of several companies, notify your real estate agent and lender as to which company you have selected. In many cases the real estate agent or lender will submit the order on your behalf, but feel free to submit it yourself if you prefer. Typically, you just need your signed Agreement of Sale to get started.

Don't accidentally waive your rights...

Along with your Agreement of Sale, your real estate agent may present you with a stack of papers to sign. Be careful. You may be asked to sign a disclosure obligating you to use the in-house title company as well. Don’t sign it, at least not yet. By forfeiting your right to shop around and designate your own title insurance/ settlement company, you could cost yourself thousands of dollars in both fees.

The Role of Your Title Insurance/ Settlement Company

There are four main categories of services that most settlement companies provide. Here’s a breakdown along with what you should expect from them.

Read Our Blog Post

2. Title Insurance does NOT cost the same everywhere

Premiums are fixed, but service fees will vary.

Don’t be fooled… Although title insurance premiums are filed with the state and for the most part are non-negotiable, you can still save hundreds of dollars in miscellaneous title fees by shopping around. Often times real estate brokers/agents and sometimes lenders, will have a profit-sharing arrangement with the title insurance company that they’re referring you to. The result of these business arrangements… inflated and additional fees passed onto the consumer.

Quick Facts:

What is Title Insurance

When you borrow money to buy real estate, your lender needs some assurance that they (and you) will be the rightful owner of that property. The title to that property, or deed, details the ownership interest. So when you buy a house, a title search is conducted to look for problems or defects in the title, so that they can be resolved before legal ownership is transferred at settlement.

Once the title is free and clear of any defects, the title insurance company "guarantees it" by issuing an insurance policy. Title insurance protects the policy holder against problems that arise or may have been missed, and covers both monetary damages and/or the cost for a legal defense to protect their ownership interest in the property.

"Title Insurance Costs the Same Everywhere, Right?"

How Much Does it Cost?

The short answer is...it depends. The cost of the Lender Policy is calculated based on the loan amount, and the cost of the Owner’s Policy is based upon the purchase price. In addition to the title insurance, most lenders require additional coverage referred to as policy endorsements along with a closing services letter. There are fees for these additional items, the fees for which are also filed with and approved by the state. Your title insurance company may also charge you administrative fees for services such as preparing, notarizing and mailing documents, incoming/outgoing wire fees or a closing fee for conducting the settlement.

Lender Policy vs Owner Policy

If you’re going to have a mortgage, your lender will require you to purchase a lender’s title insurance policy to protect their interests. You have the option to purchase a separate owner's title insurance policy to protect you for as long as you or your heirs have an ownership interest in the property.

Although issues with the title are supposed to be found and addressed during the title search process, there are instances when a problem is overlooked or cannot be found in public records. With owner’s title insurance, you’ll be fully protected if a title problem arises after closing. This means that your title insurance company will cover the costs of defending your ownership interests.

Unlike a lender’s title insurance policy, in Pennsylvania the owner’s title insurance policy is optional and typically paid for by the buyer. If you do have a mortgage, the additional cost for the owner’s coverage is usually only a couple hundred dollars.

Learn More About Owner's Title Insurance

Why shopping around for title insurance is time well spent.

Consumers who shop around and compare services and fees will save substantially.

Read Our Blog Post

Cost of PA Title Insurance

Find out how much your title insurance and settlement service would cost with ALT Title. In just a few clicks, get an instant printable, sharable online quote. No contact information required.

Title Quote

How to order Title Insurance?

If you have a signed Agreement of Sale, you're ready to order title insurance. Use our simple online order form. Just fill in a few basic fields and attach a digital copy of your agreement to get things started.

Order Title

3. Calculating your CLOSING COSTS is easy - with the right tool.

Know how much that house will cost before making an offer!

CashToClose™ by ALT Title is consumer friendly and modeled after similar software products that, until now, were only available to title insurance professionals. In less than 5 minutes, buyers will know how much cash they’ll need for settlement.

Easy to follow closing cost worksheet
Breakdown of the monthly mortgage payment
Lender fees and credits
Escrows for property and school taxes
Seller reimbursements for taxes, association fees, municipal utilities
Pro-rated based on settlement date
We even highlight where you can save!

Calculate Your Closing Costs

Try CashToClose™ for yourself, for any residential property in PA. No downloads or email address required.

Closing Cost Calculator

4. It's possible to REDUCE your closing costs.

Negotiate fees simply by asking questions.

When you’re buying a new house, the actual house itself isn’t the only thing you’re paying for—there are a number of fees that are rolled into the final price in order to make it officially yours.

The three primary players who will assist you with the purchase of your new home are your lender, your real estate agent/broker and your settlement/title company. So it stands to reason that these are the three places to start asking questions in an effort to find potential savings on your home buying expenses.

Quick Facts:

Lender Fees

Everyone is looking for the lowest interest rate, but what will that rate ultimately cost you? If you’re paying $1,200 in additional fees to lower your mortgage payment by $7 per month, it might not be worth it. Conversely, if you’re short on cash you may be able to negotiate a slightly higher interest rate and receive a credit from the lender that covers your lender fees, title insurance and recording fees, reducing out-of-pocket expenses by a few thousand dollars. For the most part, application fees, processing fees and loan origination fees are all negotiable, but these fees vary from lender to lender.

Real Estate Agent/Broker Fees

When it comes to real estate commissions, typically the real estate professional that represents the buyer is paid a commission by the seller. However, there will most likely be fees for the buyer to pay. Many real estate companies charge a broker’s services fee or flat fee commission to the buyer. We’ve seen this fee range anywhere from $150 to $700. This is basically an administrative fee to process the transaction and this fee is negotiable. Our view has been that a modest administration fee may be appropriate, but if you hire a good settlement company they will perform the majority of the same administrative tasks at no additional fee, as this service is already included in the cost of your title insurance. If you’re using your real estate agent/broker’s in-house title and/or mortgage company, don’t even consider paying this additional fee. In addition to the commission, the profits they earn from their in-house mortgage/title business should be sufficient.

Settlement Fees

The settlement company is paid out of the one-time premium that you pay for title insurance. The title insurance premium, lender endorsements and lender closing services letter are not negotiable, but there are hundreds of dollars in miscellaneous title fees that are. Look to negotiate on fees such as the settlement fee, document fees, notary or wire fees. Some companies will even cover all or part of the county recording fees. When you factor in the savings that you might realize by hiring your own settlement company and have them process all of the paperwork on your behalf, the total savings could reach $500 to $700 easily.

Which Fees Are Negotiable?

While many closing costs are unavoidable, there are some fees that can be negotiated down, waived, or avoided altogether.

Read Our Blog Post

5. Settlement doesn't need to take all day!

If you are well prepared, you are in and out in under an hour.

If you, your lender and your title insurance / settlement company are on the ball, settlement will be a breeze. You can do your part by coming to settlement prepared. Here are the most important legal documents you'll most likely be signing or reviewing at the settlement table. It's worth taking a few minutes to get familiar with them in advance.

Leave Settlement with These 5 Documents!

Following your settlement, your title company will record the new deed and new mortgage with your local municipality and once those documents are recorded your title company will issue your owner’s title policy. The owner’s policy along with the recorded deed will then be mailed to you. Save your marked up title commitment from settlement, as this serves as evidence of your title insurance until you receive the actual owner’s policy in the mail.

These 5 Documents Explained

The Note

The Mortgage

Closing Disclosure

The Deed

Marked Up Title

Settlement Day Checklist

Appraisal is complete, all of the inspections are finished and your mortgage lender and title insurance company are making sure that all of the i’s are dotted and t’s are crossed for settlement. Here is a checklist to make sure that you are prepared. Don't miss this list of what to bring and what to take with you when you leave.

View Checklist

6. How you take title to the property should not be an afterthought.

When you purchase real estate, one of the decisions that you’ll be making is how to take title to your new property. There are different types of tenancy, and the one you declare on the deed is actually quite important. The type of tenancy indicates how the ownership is legally structured and how the property's ownership will be handled after one of the tenants is gone. Your title company can help you understand your options so that come settlement day, you're not rushed through this very important decision.

Tenants in Common

Two or more persons in whom title to a single piece of real estate is vested in such a manner that they have a common or equal right to possession and enjoyment of the property, but each holds a separate individual interest or estate in the property. Each owner may sell or encumber his/her respective interest or dispose of it by will, and if he/she dies without leaving a will, his/her heirs inherit his/her undivided interest.

Join Tenants with Right of Survivorship

Two or more persons who hold title to real estate jointly, with equal rights to share in its enjoyment during their respective lives with the provision that upon the death of a joint tenant his/her share in the property passes to the surviving tenants, and so on, until the full title is vested in the last survivor. A joint tenant cannot legally encumber his/her interest without the consent or joinder of all of the joint tenants.

Tenants by the Entirety

A modification of joint tenancy between husband and wife only. Has the quality of survivorship, but neither spouse can convey his or her interest to break the joint tenancy. Upon the death of either husband or wife, full title passes to the survivor. Absent mutual consent, neither spouse can alienate the right of survivorship by any act as long as the marriage lasts. Tenancy by entirety protects both spouses through the law. Tenancy by entirety laws are built on the premise that the wife cannot be held accountable for the debts of the husband and vice versa.

Have Questions? Ask an Expert!

Text, email or call our office and get answers to your real estate questions 24/7! Read questions submitted by others and view our answers. You'll be surprised!

Frequent Questions

Save up to $700 or more at the settlement table!

Compare our services and fees with an instant online printable quote.

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No closing / settlement fee
No doc prep fees
Real estate attorney on staff
No miscellaneous title fees
No processing fees*
We respond to inquiries 7 days a week

*Rather than pay a real estate brokerage, their title company or conveyancing company an additional fee to manage your transaction, which averages $395-795, let ALT manage your transaction at no additional charge.