When buying a home, homebuyers are left with the option of buying Title Insurance. This means it is up to them to choose a Title Company. Title Insurance is an important element of home buying, as it serves as risk prevention at a one-time cost. Once this one-time premium is paid at closing, your Title Insurance Policy protects your title for the length you own the home. Any potential ownership claims against your property are protected via your Title Insurance.
So, not only is Title Insurance an important element of homebuying, it is up to the homebuyers to select the right Title Insurance provider. Price alone will not be the only factor in determining the right Title Insurance provider. Therefore, homebuyers will want to ask the following questions of potential Title Insurance Companies.
In Addition to the Premium Cost, What are the Other Fees and Charges?
While homeowner’s reflexes might urge them to find the lowest premium, the list of additional fees and charges could likely bump the lowest rate up past the highest rate. Therefore, it’s a good idea to ask for all the fees the Title Company might charge. These can include electronic delivery fees, overnight courier fees, cashier’s check fees, release checking fees, and/or wire fees.
Keep in mind, even if the company still maintains one of the lowest premiums, this can signal a lack of experience, inferior title searches and examinations, and/or a substandard source for property data. Too, the title company may not be providing the complete title and closing services as required by the Division of Insurance. If it seems too good to be true, it very well might be.
Is Your Title Company a Neutral Third Party?
Some Title Companies are owned by real estate firms, lenders, or builders. When real estate firms own a Title Company, home owners have no decision in picking a Title Company of their own. This means owners must succumb to the policies and premium prices of whatever Title Company the firm owns. Homebuyers are better protected when their money and closing are handled by a neutral third party. Therefore, it is best to pick a Title Company that is independent from any real estate ownership.
Is Your Real Estate Agent Financially Affiliated with any Title Company?
On the other hand, more and more real estate agents are making business connections with Title Companies, amongst other business affiliations. An Affiliated Business Arrangement means the real estate agent refers or influences customers to use the particular Title Company the agent is affiliated with. By law, the referring party must give a disclosure notice form to the customer before or during the time of referral. This Affiliated Business Arrangement disclosure details the two parties’ business arrangement and provides an estimate of the Title Company’s charges. However, this disclosure does not share how the revenue from the transactions will be split between the two providers. And, as you’ll see in the next section, both providers will benefit financially from this arrangement.
Does Your Agent Get Compensation from their Title Company Affiliation?
Be warned, this real estate and Title Company affiliation does not save you money. In fact, it will increase your closing costs. And if you’re looking for an honest, trustworthy Title Company, then one affiliated to a real estate firm for monetary gain is not a company that would have your interests as top priority. It’d be best to look elsewhere. You want to find a Title Company that’s right for you, not one that was recommended for financial gain, and you certainly want to avoid extra closing costs.
So, when looking for a Title Company, keep these questions in mind. If they’re too close to a real estate firm, you might be paying more come closing time for no reason. If they’re costs are incredibly low, it may be too good to be true. At the end of the day, when you buy a home, you want to make sure that home is 100% yours. With the right Title Insurance Policy, that can be assured for as long as you’re under that roof.