Ways To Save Money On Title Insurance
Today’s potential home owners are spending more time shopping around to find the perfect real estate agent and best rates on their mortgage loan, but most end up paying too much for title insurance and closing costs. The fact is that most consumers are unaware that they have the right to choose their own title insurance provider and use the company suggested by the mortgage broker, attorney, or real estate agent they have employed. By taking the time to do some research, consumers would realize that they could save themselves a lot of money and headaches by comparing quotes from title insurance companies.
You have a choice
One of the main reasons for different costs among agents is a result of partnerships and kick back schemes these agents have with mortgage brokers and realtors. That is why it is wise not to just use the company recommended by your broker or agent. They may be getting a payoff for the business they send to the title insurance agent and guess who pays for that - you. These deals are illegal and they are getting more attention from state regulatory agencies but the fact is they can be so lucrative that many will ignore the risk and continue doing it.
Choose title insurance wisely
Consumers should understand this and look very closely at what they are being charged for title insurance and related services and compare that quote to what other title companies are charging. Consumers have the right to do this and should be leery of an attorney, broker, or agent who says otherwise because it probably means that they are getting something in return for the referral they are sending. Get at least 3-4 quotes and make sure that the quoted cost will not change when the time comes to sign the closing documents. The last thing you want is to sit down at closing and find out that you have to pay more than what you were quoted.
Buy title insurance directly from a title insurance company
In the past title insurance agents worked exclusively with industry professionals and ignored the consumer. This is starting to change as consumers become more educated about how title insurance works and the legal issues surrounding the industry. New types of title insurance agents are stepping up to offer policies directly to consumers and educate them on the entire title and closing process. This puts the power into the hands of the consumer and can help them save a lot of money on their closing costs. Because these companies are not relying on referrals from industry insiders they do not need to provide kick backs for business referrals.
Do your homework and save money on title insurance
Consumers who educate themselves on title insurance will be able to make informed decisions on what company they should use and can save $100s or even $1000s on closing costs. Shopping for the best mortgage rate makes sense and doing the same for title insurance is just as sensible.
Refinancing? Save On Title Insurance, The secret is in the reissue rate
If you want to save money on one of the most costly items connected with a home mortgage, learn these two words: Reissue rate.
Reissue rates are discounts off the standard premiums charged on title insurance policies. Though the discounts vary from state to state and from title insurer to title insurer, they average 50 to 60 percent. Reissue rates are normally available only on refinancings, but in some areas they can be obtained on home resales where a title search was performed relatively recently for the seller.
Here's how it works. Say you bought your home five years ago. Now you see mortgage interest rates in the mid-6 percent range and you decide to refinance. Should you pay full price for another title search and insurance policy? Given the fact that a comprehensive search of the public records on your property was performed just five years ago, there's no reason to have to pay for another full search.
That's why the title industry offers special discount pricing for situations such as yours. Rather than paying $1,200 for a new title policy, for example, why not take advantage of a reissue rate at $500 or $600?
Why not, indeed? Why isn't the concept of discount pricing more widely known among American homeowners? Because it is not widely promoted to the general public, as even the industry's national trade organization admits. James R. Maher, executive vice president of the American Land Title Association (ALTA), says that he is "aware that not all of our members disclose" the existence of reissue rate discounts.
But the association's own Website recently posted an advisory for consumers referring to the "good news" from the title industry. The good news, put bluntly, is that you don't need to pay more provided you know to ask for a reissue rate when you apply for a refinancing.
Title insurers' policies sometimes severely restrict the eligibility period to obtain reissue discounts. Others have strict rules requiring presentation of the prior title policy to the title agent, to prove that insurance still covers the dwelling. The rules and discounts also are regulated by state laws in most cases, so consumers need to ask what rules apply to their specific situation.
Generally your mortgage broker or lender can make the arrangements for a reissue rate at the time of selecting the title coverage or closing agent. Some brokers say that they routinely ask for reissue rates on refis as an additional service to their customers. But others admit that unless an applicant asks, they don't mention the reissue rate option.
Some title, escrow or settlement attorneys also routinely mention the existence of a lower cost option. But the financial incentives for them are heavily weighted to non-disclosure, as ALTA confirms. The smaller the premium that is charged for the insurance coverage, the smaller the compensation to the title agency or settlement attorney. The avarage national "split" of the premium charged at closings, according to ALTA's Maher, is 70 to 72 percent to the title or settlement agency, and the balance to the title insurance company. The splits go as high as 92.5 percent to the agent or attorney and just 7.5 percent for the insurance, says Maher.
ALTA's Website posting is intended to dispel some of the mystery about reissue rates. Although it offers little in the way of practical details, its fundamental message is one that homeowners should heed: Say the magic words. Ask for a reissue rate when you go to refinance. Don't pay full price if you don't really need to.
Copyright © 2002 Realty Times