Marketing Director
Federal Title & Escrow Co.
The Washington Post ran an article in last Sunday's paper called Easing the Pain of Closing Costs. Considering closing costs pertain largely to the title insurance and escrow services, I was a little surprised to see just three sentences about choosing the right title company. See below:
Find cheaper title insurance. Title insurance protects against challenges to your ownership, with separate coverage for your lender and for you. But as much as 80 percent of the premium goes to paying commission to a title agent. Shop around for title insurance.
I wanted to throw in my two cents in the comments section at the WaPo website but the comments section has been closed! So since I already went the trouble of cobbling some thoughts together, I'll leave them here:
Where's the love for title insurance? Three sentences is all?!?
If somewhere down the road a title defect comes to light, title insurance is all a home buyer has to protect his/her real estate investment. In DC, the most common title defect is a result of fraud.
Lenders require home buyers to purchase a lender's title insurance policy, while an owner's policy is optional. So there is an opportunity to save some money there.
You can choose between standard coverage or enhanced coverage, too. Some title companies may downplay the standard option, but in many cases a standard policy is sufficient. And it's cheaper.
The main thing for home buyers to know if they have the right to choose: Home buyers choose the policy, and they can choose what title company handles the settlement. So don't let a mortgage lender or real estate agent steer you toward a title company without doing a little cost comparison of title companies on your own. Lots of companies offer online quotes. Some title companies (like Federal Title) offer extra savings just for ordering services directly from them online.
This video is a good introduction to the overall process.
... Anyway, the article represents title insurance unfairly. Yes, it can cost thousands of dollars on top of the sale price of your home (around 3-6 percent extra depending on where you live), but the peace of mind is worth it in the long run.
Here's a final thought: If closing costs are outside your budget, consider offering the seller more money for the home in exchange for him/her covering settlement and escrow fees.
Posts
Nikki,
ReplyDeleteI saw this article a few days ago as well. This is nothing more than a republishing of the original Kiplinger's piece that is running now. I find that this article shows a complete lack of understanding as to what title insurance is and what the title premium goes to cover. THE TITLE INSURANCE POLICY PREMIUM IS NOT COMMISSION. This lie has been propagated by Entitle Direct and others like them. The premium is paid to the underwriter and the 80 percent or so that goes to the agent all goes towards risk mitigation. We are charged with elevating the underwriters risk and we pride ourselves on doing so. The underwriter doesn't pay us a commission. We do the search, examination, order document copies, close the transaction, and issue a clean policy. All that plus the staffing and building costs that go along with running a company. I agree, shop around! But lets call this piece what it is... Garbage!
Michael L. Rubin
http://titleinsurancethoughts.blogspot.com/