10 Things You Should Know about Title Insurance: APR Includes Settlement Costs

Settlement costs factor into your loan's Annual Percentage Yield (APR). Home buyers should know the settlement process can be delayed due to recent changes to the Truth in Lending Act (effective Aug. 1, 2009). If the actual APR differs from the estimated APR by more than 0.125 percent, your mortgage lender must issue a new initial disclosure that reflects the accurate rate and wait a minimum of 3 business days to close the deal. To avoid surprises at the closing table, invest five minutes of your time at the beginning of the transaction to obtain a guaranteed quote online for settlement services.

10 Things You Should Know about Title Insurance: Fixed v. Variable Rates

Some closing costs are fixed while others are variable. The cost of your title insurance policy and government recordation fees are dependent on the purchase price of your home, and the bulk of settlement costs are typically paid by the home buyer. However, the seller doesn't get off scot-free. Seller fees include a fee for mortgage release procurement and deed preparations. The settlement fee is often split between buyer and seller. Home buyer fees include a title examination/abstractor fee, location survey fee and a fee to process paperwork. A title company may charge additional fees unique to each transaction, but the extent of the fees should be disclosed up front.

Closing Costs Explained Visually 'Good Introduction' to Settlement Process

If you're shopping for a home and haven't had a chance to watch this quick introduction to title insurance, you may want to check it out. While "Closing Costs Explained Visually" is targeted toward consumers, real estate experts are also finding it useful.

"Rather than a detailed step-by-step dissertation on title and escrow -- which many consumers really need before the home buying begins -- the two-minute Federal Title & Escrow Co. video is useful as a primer to get you into the basics of the process," writes Broderick Perkins, editor of Deadline News and the Real Estate News Examiner blog.

After a proper intro to the settlement process from Federal Title, home shoppers may then want to read Perkins' thorough three-part title insurance series for a better understanding of today's title insurance industry.

My favorite installment: Part 3 - Shop Around for Title, Escrow Services.

Title insurance companies sometimes get a bad rep, but we're not all bad. Some companies are committed to giving their customers the lowest rate possible on insurance premiums. Federal Title for one is saving home buyers as much as $2,000 through our REAL Credit Program.

As a home buyer, the more you know about the settlement process, the more you'll be able to save on closing costs.

10 Things You Should Know about Title Insurance: Location Weighs In

Who pays for title insurance depends on where you live. Sometimes it's the buyer who pays, sometimes it's the seller. And sometimes the cost is split between the two. In the Washington Metro Area, for example, title insurance premiums are generally paid by the home buyer. It's important to note that title insurance is regulated largely on the state level. If you're conducting a little Internet research, be sure to use regional qualifiers in your search (e.g. state, county, etc.).

Washington Post Shows No Love for Title Insurance

By Nikki Smith
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.

10 Things You Should Know about Title Insurance: It's a One-time Fee

Title insurance is a one-time fee. Unlike other types of insurance, there is no ongoing premium to pay for title insurance. Your mortgage lender is required to provide you with a Good Faith Estiamte for closing costs, including title insurance, and factor those costs into the initial disclosure. This three-minute video explains closing costs in laymen's terms: Closing Costs Explained Visually.

10 Things You Should Know about Title Insurance: It's Required

Your mortgage lender will require title insurance. This isn't one of those cases where you can skirt the extra expense and hope for the best. If you are borrowing money for a real estate investment, your mortgage lender will want to make sure it's protected. Title insurance protects your money if it turns out the seller didn't legally have the right to sell the property in the first place. At minimum, you will be required to purchase a lender's policy. An owner's policy, while recommended, is not required.

10 Things You Should Know about Title Insurance: Shop and Compare

It's easy to save money on title services. Ask for quotes from several title companies and compare them with your real estate agent's or mortgage lender's recommendation. By shopping around and asking about discounts, a lot of times the home buyer can save thousands on closing costs.

10 Things You Should Know about Title Insurance: The Right to Choose

You have the right to choose your title company. In an industry contaminated by affiliated business arrangements, kickbacks and other referral incentives, the Internet returns the power to the people. Don't let your mortgage lender or real estate agent steer you toward their preferred title company without doing your homework first. You could save thousands of dollars – yes, thousands – by selecting a title company on your own.

MD 1st Time Homebuyers: True/False

STATEMENT: As long as you have not owned a principal residence in Maryland in three years, you qualify as a Maryland First Time Homebuyer.
FALSE: The code does not provide a reset clause – if you have ever previously owned a principal residence in Maryland, no matter when, you are not eligible for the exemption.

STATEMENT: If you have previously owned a property in Maryland, but have never lived in that property, you qualify for the exemption.
TRUE: The requirement is that you must not have previously owned a principal residence in Maryland. Previously owning a non-principal residence does not disqualify you, as long as the property that you are purchasing will be your principal residence.

STATEMENT: It does not matter how you title the property, you will receive the exemption as long as you are a Maryland First Time Homebuyer.
FALSE: If the purchaser is a Trust, a Partnership, an LLC, or a Corporation, it can not qualify as a Maryland First Time Homebuyer.

STATEMENT: If two people are buying a principal residence, as long as one of the buyers has never previously owned a principal residence in Maryland, they can receive the exemption.
FALSE: Every purchaser who intends to live at the property as a principal residence must have never previously owned a principal residence in Maryland.

STATEMENT: While I qualify for the exemption, my parents who will be on title only to help me get the loan disqualify me since they already own a principal residence in Maryland.
FALSE: The Maryland Code will still allow the exemption as long as the parents sign an affidavit stating that they are a co-maker or guarantor of a purchase money deed of trust and that they will not occupy the residence as their principal residence.

Location Survey - WHY?

The GCAAR Regional Sales Contract makes only one reference to the survey and is found in para.#19 as follows: "The title report and survey, if required, will be ordered promptly . . . ." Note the key phrase "IF REQUIRED." What does that mean?

"IF REQUIRED" means if required by the purchaser's lender. Nearly all mortgage lender underwriting will require the title insurer to issue a lender's title insurance commitment without exception to survey matters. In other words, a lender will not accept a title insurance policy without coverage for survey matters.

Transparent Title Companies - Where are they?

By Ann Herdon Eskew

WHAT IF YOUR PREFERRED TITLE COMPANY:

* Delivered an instant, online, guaranteed closing cost quote to you and your clients - specific to the transaction;
* Was independent and gave back part of its revenue to your home buyer; instead of giving money back to your broker through an Affiliated Business Arrangment;
* Allowed you to submit the transaction order entirely online.

Very few title companies offer a Web 2.0 experience when it comes to delivering service. In fact, most still cling to fax machines and land lines -- taking orders over the phone, quoting fees/costs over the phone. Further, many title companies have no room to significantly lower their fees to your client because they are kicking back 30% to 50% of the transaction revenue to a broker by way of an Affiliated Business Arrangment.

I am proud to say that my company, Federal Title, has remained independent for the last 13 years. We have grown to be the largest independent title company in the Washington, DC metro area. Our growth is directly attributed to our ability to deliver instant, online, and guaranteed closing cost quotes to agents, home buyers, and mortgage lenders. It is also attributed to our REAL Credit Program in which we give back part of our revenue to the home buyer rather than a referral source. The consumer loves transparency and savings and we deliver.

Federal Title enters Miami-Dade market

Federal Title & Escrow Company Enters Miami-Dade Market with Its "Guaranteed Closing Costs" and "Anti-Kickback" Business Model

Coral Gables, Fla., February 5, 2009 - Seeking to assure a more transparent settlement transaction that delivers a guaranteed quote for closing costs and directs a financial benefit to the home buyer instead of the referral source, Federal Title & Escrow Company introduces to the Miami-Dade market an unprecedented model that empowers the consumer. While many title companies share their revenue with real estate brokerages as a reward for the referral, Federal Title instead gives part of its revenue back to the consumer. The announcement comes on the heels and in the spirit of the U.S. Department of Housing and Urban Development's proposed rule to reform the Real Estate Settlement Procedures Act ("RESPA").

Federal Title's Market Entry

Federal Title & Escrow Company, an independent provider of real estate settlement services based in Washington, DC, proudly announces its expansion into the Miami-Dade market with the opening of its newest office in Coral Gables, FL.

The new Coral Gables office is part of the company's expansion plans to introduce its "guaranteed closing costs" and "anti-kickback" model in other markets. The model is supported by the company's proprietary online technology that delivers instant online closing costs specific to the consumer's transaction. The office will be managed by the law firm of Bales & Bales, P.A., a Coral Gables-based law practice.

Consumer-Friendly Business Model

In the majority of today's real estate transactions, real estate brokerages profit from title insurance premiums charged to home buyers or sellers by participating in joint ventures with title companies (also known as "Affiliated Business Arrangements"). Such arrangements require the participating title company to share its revenue with the real estate brokerage. Individual real estate agents are urged by their companies to refer home buyers and sellers to the joint venture title company in order that the brokerage may profit from the referral.

"For too long, at the expense of the consumer, title companies have been beholden to the financial interests of their referral sources. Legal and illegal kickbacks in the real estate transaction have fostered distrust with consumers and posed ethical dilemmas for real estate agents," said company president, Todd Ewing, adding that Federal Title does not share its revenues with referral sources. Instead, the company gives back part of its revenue to the home buyer through its innovative REAL Credit ProgramTM.

Attorney Amy Bales, manager of the Coral Gables office, added: "Our ability to deliver an instant, online, and guaranteed quote for closing costs along with substantial savings to the home buyer through our REAL Credit Program will give our agent and mortgage lender referral sources a distinct advantage over others. The Miami-Dade area real estate market is in dire need of a face-lift. Our real estate community needs to deliver more transparency to the consumer and raise the bar of ethics," said Bales.

About Federal Title & Escrow Company

Federal Title & Escrow Company (miami.federaltitle.com) (www.federaltitle.com) provides real estate settlement services for residential and commercial real estate transactions in Florida, Washington, DC, Maryland, and Virginia. Federal Title is committed to establishing long-term relationships with real estate agents and mortgage lenders who embrace transparency and high ethics.

Headquartered in Washington, DC, Federal Title is the largest independent title company in the Washington DC metro area. Through its proprietary and innovative AQGTM technology, Federal Title delivers online guaranteed closing cost quotes for the benefit of home buyers and referral sources. Through its REAL Credit ProgramTM, Federal Title gives back part of its revenue to the home buyer instead of referral sources.

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