Title insurance is necessary when you borrow money to buy a home. But do not blindly accept the title company recommended to you. An article in the Wall Street Journal says shopping around can save you thousands. That’s right, thousands.
The article cites online title companies like GetTitleInsurance.com , TitleInsurance.com, and EastTitelQuote.com as alternatives. But always check any title insurance company’s credentials with the state licensing agency, state insurance department, Consumer Affairs & the Better Business Bureau. Saving money is one thing, having the company around to back up the policy is another.
Make sure you compare premiums and fees. While many states (NY) regulate the premiums on lender and owner policies, the fees are not regulated. And they can add up.
And don’t forget to ask about discounts. Some common discounts are available on:
1. Refys less than a few years old (normally 3-5) can qualify for a reduced premium
2. New construction, especially where the title company is doing the bulk of the homes
3. Using the seller’s title insurance company to recertify and insure you, the buyer.
Another Tip for Borrowers: Do not let the bank pay your property taxes. Banks will say you can’t avoid this requirement but for a nominal fee they’ll give in (usually less than $100 for the waiver). Don’t take no for an answer. The reason for paying your own taxes (and insurance) is control. If a bank is late with a property tax payment, they pay a penalty but you’ll never know it. By paying your own property taxes you control the process and can take advantage of prepayment discounts. The same is true for insurance premiums. If the bank pays, it’s a real hassle to change insurance companies to take advantage of better rates.
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Good advice. I am absolutely amazed at how quickly the industry is responding to consumer choice. Competition is good for the title insurance industry. It will lower prices while increasing the quality of service. Consumers – for your benefit and for the good of the industry, please shop.
An impound/escrow account for the payment of property taxes is not necessarily a bad thing. Some borrowers do not have the discipline to set aside moneys for the payment of their property taxes and appreciate the convenience of having it automatically added to their mortgage payment. As you noted, if the lender accidentially pays the property taxes late, any penalty incurred is the responsibility of the lender.
In addition, there are some loans which require impound/escrow accounts. Most conventional loans in excess of 90% loan-to-value must have an impound account per federal regulation. The banks can not waive this requirement. Also, impound/escrow accounts are mandatory for government loans, both VA & FHA.
Some lenders may require the title company to be approved by their corporate legal department so it may not be possible for the consumer to opt for their first choice of a title company.
Many title companies are taking advantage of technology and offer “e-rates” or “single” rates which are substantially cheaper. If you can not get the title company of your choice, check to see if the title company offers discounted “e-rates.”
Lastly, in regards to borrowers, the Wall St. Journal article citing “thousands of dollars” can be saved is exaggerated. One would have to have a loan in excess of $1,000,000 to even begin to save a thousand dollars. It is another matter for sellers of a property.
Thanks Angela for clarifying the escrow cases where a consumer’s hand is tied. And yes, the discipline to set aside funds is not required when a bank pays. But consumers should know they may have a “choice”. They of course may opt for the bank. Then again, they may not. I chose to pay my own taxes & insurance. I am more conscious of changes in my taxes (& insurance) when I pay & have appealed increased assessments accordingy.
Nonetheless, where you can compare fees and premiums, do so and always inquire about policy discounts that may not be automatically disclosed to you.
Re: Tax late fees: I am not aware of lenders eating the late fees (I have seen the opposite when escrow statements were reviewed)—even if they did pay the late fees, they wll not “prepay” taxes that would give you a discount. The ability to take this discount and change insurance companies to save money may offset any incovenience—at least the consumer should know they may have options & let them make an informed choice. Most dont know they have the choice.
Yes, you are correct that it may take a million dollar loan to save thousands of dollars savings, but in many urban markets, those are very plentiful. Even saving hundreds is worth it, don’t you agree.
A client of mine saved a $350 new survey cost when one company agreed to accept the owner’s slightly dated one. That $350 had nothing to do with amount of the loan. Fees like this & a policy discount can easily add to a thousand even without a million dollar loan.