Title Insurance: 5 Things Every Homebuyer And Mortgage Refinancer Should Know!

By | February 1, 2016

Typically a homebuyer will let their attorney take the lead when it comes to the title insurance portion of a purchase transaction!

Similarly those refinancing a mortgage will do the same with their lending institution.

And while that is certainly all well and good think about this…In any purchase that a consumer makes (particularly expensive and important ones) they should at the very least be aware of some of the criteria being considered prior to the selection of a product provider is made.

After all, when you buy a television or a car you are intimately involved in the decision-making process so, why not in one of the most important segments of your property purchase/mortgage refinance.

That is the selection of the firm that will be ensuring that you have good and clear title!

Of course the cost of the title insurance premium will not vary regardless of the firm that is providing it but, there is so much more…

Five Things To Be Aware Of When Buying Title Insurance

1. Examining The Title Bill Making Sure To Compare Apples To Apples, not Apples To Oranges – When you are provided a copy of the title bill for your transaction ALL of the fees, taxes and recording charges should be included.  

Otherwise, if a homebuyer chooses to ‘comparison shop’ the cost with another firm, they will NOT have a basis to actually see how the expenses stack-up!

These are two title bills for the same transaction ($670,000 Nassau County purchase with $536,000 mortgage) with one of them including the taxes and recording fees and the other not including them. If a title insurance provider sends the one without those taxes and recording fees included, then they are not giving the consumer an actual basis for comparison to a firm that does include them!

The first sample bill does not include those fees with a total cost to the purchaser of$3,792.56. The second does include them with a total (and the actual) cost to the purchaser of $9,440.56. For the consumer who is unaware the cost comparison seems unreasonable when in effect they are comparing apples to oranges…

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2. Know Who The Title Insurance Underwriter Is! – When you buy insurance, regardless of the type, the key is that if a claim is put in that the underwriter will have the financial ability to pay! Remember that the claims-paying ability of companies are not created equal!

3. What Is The Title Claims Experience Of The Firm Chosen To Provide The Title Insurance Policy? – As not all underwriters are created equal, the firm actually doing the work to ensure a buyer will have good and clear title are not either! Don’t be afraid to ask questions as, once again, for most people this purchase will represent the largest one that they will make in their lives!

4. Does The Title Company Chosen And/Or Anyone Involved In The Transaction Have An Affiliated Business Arrangement? – Perhaps an uncomfortable question to ask, but you as the the consumer have the right to know and the firms involved have the obligation to tell! An Affiliated Business Arrangement or AfBA, ‘is an arrangement to share or refer business between two different companies involved in providing services in the closing of a real estate transaction. There may be ownership interest of a party in both the business referring out the service and the business receiving the referral.The practice is not illegal, but is regulated by RESPA to assure full disclosure to the consumer of any relationships where business is referred in this way.’ (Source)

5. You As The Consumer Have The Right To Choose The Title Insurance Provider – It’s entirely possible that you may not want to but be aware that if you do, it is your right!

Michael Haltman is President of Hallmark Abstract Service in New York. He can be reached at mhaltman@hallmarkabstractllc.com.

9 thoughts on “Title Insurance: 5 Things Every Homebuyer And Mortgage Refinancer Should Know!

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  8. Tobias Armstrong

    I really liked the list of things you suggested that I be aware of. I’m getting ready to buy a house for the first time, and I really don’t know as much as I feel like I should. This gave me a lot of good questions to bring up with my agent, and hopefully it’ll help me understand what’s going on a little better. Thanks for sharing!

    Reply

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