On November 1, 2016 American’s will begin what may very well be the fiscally painful and mentally sickening enrollment process for their next years health insurance coverage!
According to reports, in New York State premiums on the state exchange will rise more than 20% and in some other states around the country will rise triple digits.
And compounding the problem of cost is the fact that in some cases there will be only one insurer to choose from (in New York State of providers will remain the same at 16)!
In other words, and contrary to Rep. Nancy Pelosi’s emphatic promise, affordable healthcare has not necessarily worked out that way.
Title Insurance, However, Is Still Affordable Insurance!
- In New York State title insurance premiums will be the same regardless of the provider that you or your representative (attorney for a purchase or lender for a refinance) utilize!
- However, the other fees (aka ‘junk fees’) that will be charged in your transaction for searches, municipals, survey and other closing fees can and will vary widely from firm to firm!
- Consumer Protection: Consumers should absolutely make sure that those ‘other fees’ being charged are reasonable! How? Ask for a copy of the title bill and check it against a title bill you request from another provider!
Isn’t the money you can save on the ‘other fees’ involved when you buy title insurance better being in your pocket than in the pocket of the title insurance company?
So How Do You Make Sure That The Fees Being Charged Are Reasonable And Fair?
In New York State if (when) you are asked at the closing table to write out a check for a title insurance policy* you will notice, if you did your homework and checked your title bill with a second provider, that the insurance premium will be the same no matter who provided the cost breakdown (TIRSA Rate Manual).
But while the title insurance premium is a constant the other fees, known by many in the industry as ‘junk fees’, are not.
And because they are not the cost of these fees can vary by hundreds of dollars across the spectrum of firms who provide title insurance.
And of course there are other factors to consider in the process as well.
If you are buying a property your real estate attorney will likely handle the selection of the firm providing title insurance and in a mortgage refinance it will typically be the lender.
And both of these circumstances are more than fine but, given the fact that in any purchase of a product consumers will typically do research and comparison shopping to know that the brand is good and the price is right, some basic knowledge when it comes to title insurance would probably be helpful.
With that in mind…
Title Insurance Rules Of The Road
‘As a primer, title insurance is backward looking and ensures that when you close on a property whether commercial or residential that there are absolutely no encumbrances that could in any way raise questions concerning your ownership rights.
This fact of course makes title insurance very different from the forward looking insurance such as health or automobile that is protecting the policyholder against some potential future unknown occurrence.
But whether backward or forward looking, any insurance policyholder wants to be 100% confident in the fact that were a claim ever to arise, that the financial strength of the underwriter is and will be exceedingly strong and will never pose a problem concerning its ability to pay.
Therefore for the sake of argument, let’s assume that the title insurance underwriter that you choose (because individuals have the right to choose their title insurance provider), your attorney chooses or that the financial institution is working with is one of the financially strongest and highest-rated in the marketplace.
In the case where the underwriter is one of the best, does that fact render the title insurance company chosen to provide your policy irrelevant?
Claims and the Provider Chosen
Sorry, but the answer to that question is no because the policyholder needs to think among other things about the frequency that the title insurance company that they may be planning to use has experienced claims.
Now let’s assume that the title insurance underwriter is one of the best and that the company being considered has an excellent claims (or lack thereof) experience. Does this fact make the choice of a title insurance provider irrelevant? No it does not!
Concerning the question of consumer cost, the answer of whether the title insurance provider that you choose is irrelevant is still no because while the title insurance premium will be the same regardless of the firm that you use, the ‘other’ fees involved in your transaction can and likely will vary widely among firms!
So all things being equal regarding underwriter and claims experience (apples to apples comparison), why not choose to keep more money in your own pocket instead of in the pocket of the title insurance company?
Some title insurance rules of the road…
- In a purchase transaction ask your attorney for a title bill in advance and then ask another title company for a sample title bill based on the location of your property, the purchase price and the mortgage amount. Then compare the two and if there is a large difference do not be afraid to question that fact!
- In a mortgage refinance do the same comparison by providing a second title insurance company with the location of the property and the mortgage amount. Also, depending on the age of the mortgage being refinanced the borrower may be entitled to a reissue rate that is less than the normal premium and depending on various parameters a CEMA (Consolidation Extension and Modification Agreement) may be possible as well that will reduce the mortgage recording tax that is due. Ask the questions!
- Finally, understand that while a borrower or property owner may not be asked, it is their right to choose the title insurance provider that they would like to use!‘
Questions or thoughts about the process or an experience you’ve had in the past?
Let us know either in the comments below or by sending us an email at firstname.lastname@example.org.
*In an all-cash purchase transaction there will not be a lenders policy purchased and it is up to the buyer whether to purchase an owners policy. In our humble opinion it most definitely is!**
**‘An Owner’s Policy is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you have an interest in the property. Only an Owner’s Policy protects the buyer should a covered title problem arise.’ (Source)
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