So, your realtor just referred you to a title insurance and settlement company. But that doesn’t mean that’s where you’ll get the best deal or the best service.
“Homebuyers should shop around because the cost of the services, as well as the services themselves, will vary greatly from company to company,” said Frank Dowd, Licensed Title Agent and Founder of Associates Land Transfer Company (ALT).
“When a customer contacts you for a title insurance quote, they’re really asking you to provide them with all of the title related fees that they’ll be required to pay at closing, not just the title premium,” he added. “All too often I speak to consumers that are shopping around and thoroughly confused.”
For many prospective homebuyers, title insurance and settlement services are a mystery to them. In addition to the title premium itself, there are a number of fees which can quickly add up to an additional $500 to $900, such as the lender-required endorsements and closing protection letter, county recording fees, miscellaneous processing, and notary fees.
“I find it disturbing when I see quotes coming in from other companies that don’t include everything they’re going to charge,” said Dowd. “It seems disingenuous to me; but it’s the nature of the industry.”
Fortunately, Dowd said that the word is spreading, and more people are learning that they have the opportunity to shop for title insurance and settlement services. In two recent publications, both the FDIC and Consumer Financial Protection Bureau encouraged homebuyers to shop around for title insurance and settlement related services.
And Yes, If You’re Going to Have a Mortgage You DO Need Title Insurance
A title search and title insurance protect the lender and/or the homebuyer from any problems related to the property’s title, such as unpaid property taxes by a previous owner, or their long-lost heir who claims they have rights to the property, and more. Whenever a person buys a house, a title search is conducted to look for these types of problems in public records and to resolve any that arise before you go to closing. Title insurance (which is paid in a one-time fee at closing) protects you and the lender of your loan (if there is one) from any problems that arise or may have been missed. Even if you decide not to buy it for yourself, it will be required by your lender.
Choosing the right company for you
To find the right title insurance company for you, start with a little research of your own. Explore the internet and look for well-reviewed companies that have a strong track record in your state. You might want to ask family and friends to see if they have anyone they would recommend as well.
“I think it’s also good to hire an independent company where you will be talking directly to the principals of the company if necessary,” added Dowd. “I’m cautious of companies that do business in all 50 states because the customer service representatives you deal with aren’t always familiar with the particular municipalities within the state, and that’s important.”
When you have a list of companies, be sure to contact each one and compare their rates and fees. Get a detailed breakdown of their costs and learn how many closings they’ve done in your state – the more they have under their belt, the better. For the companies that took the time to invest in the most up-to-date technology, most (if not all) of this information will be available online.
You should also ask if there will be an experienced closer who can go through all of the documents with you at final settlement, or if they’re just sending a notary. “Some large national companies send a notary to closing, and if you have questions about documents, they can’t answer them for you. They’re just there to notarize the documents,” he said.
While this can seem like a fair amount of work, you’ll know that you’re in good hands when you find the right company, and that you won’t get any surprises.