Title insurance provides financial protection in the event that someone claims partial ownership of your property after you have purchased and closed on it. A title agency must be contacted by the lender to verify that there are no open claims against the property you are purchasing. The seller must address any issues that arise before closing. This can be done with their own money, or through their title insurance policy.
Title search companies are not perfect, and somebody may still claim the property even after you’ve bought it. You will not be responsible to pay the claim if you have a title policy. Your insurer will take care of it. This policy is optional but should still be considered. These tips will help you save money on your title insurance.
1. Compare prices to find the best deal
Two steps are required to obtain title insurance. To find errors or problems in the deed, first, a title search is performed. An insurance policy is then underwritten to protect buyers in the event of any problems.
Insurance providers in many states are permitted to set their prices. This means that insurance premiums can be very different. If homebuyers don’t shop around, they won’t know which title companies offer best rates.
The American Land Title Association website is a good place to begin comparison-shopping. It offers a geo-based search engine.
You can also ask an independent attorney to help you understand local regulations and costs, as well as recommendations for insurance companies.
Rafael Castellanos, the founder of Expert Title Insurance Agency in New York, says that buyers need someone who can think independently and is knowledgeable in real estate. An attorney is often the best person to do that.
2. Negotiate add-on fees
Title insurers are not allowed to adjust their rates in states with strict insurance regulations. Homebuyers won’t find any difference in their premiums between companies.
In almost all cases, however, additional fees will be charged when you purchase a title insurance policy. These fees include copy and mail charges, courier charges, and costs for searches or certificates. They can even be negotiable if the insurance premiums are not.
Experts claim that you can often reduce these costs by simply calling the title insurer and asking for some of the fees to be removed. You can always find another provider if the insurer refuses to pay. You don’t have to choose the first company recommended by your real estate agent or lender.
3. Ask for the “simultaneous rate of issue”
Title insurance is purchased by homebuyers to protect themselves. Their mortgage company may require that they obtain a separate insurance policy in their name.
Typically, it is the borrower who must pay both.
Castellanos says, “The bank partners you” but “they need to be protected, confident that they have an active first lien against the property. So they require this insurance.”
The two insurance policies can be purchased together, even though they are not independent.
Castellanos explains that policies can be issued simultaneously in certain states, which is called the “simultaneous rate”. It also includes a very low premium for the lender’s policy.
This means that the combined title cost of both policies is often lower than if they were bought separately. Ask for this discount.
4. Ask the seller for payment to cover your policy
Homebuyers might feel empowered to ask for title insurance if the local real estate market favours sellers over buyers.
This was a rare request. Sellers are more motivated in a buyer’s marketplace and may be more open to negotiation.
Edward Mermelstein, a New York real estate lawyer with Rheem, Bell and Mermelstein, says, “You will see people financial negotiating on every terms, including asking someone for their title insurance.”
He warns buyers to not lose sight of the ultimate goal which is to sell the property.
Buyers can request many concessions in a deal, such as a lower purchase price or a home warrant. These are far more cost-effective than paying for title insurance. You could also ask the seller to pay a dollar for your closing costs, rather than just title insurance. This will reduce the amount of money you have to bring to closing.
5. Check for lender closing cost discounts
Lenders might be willing to give a discount on closing costs, regardless of whether you’re buying a new home or refinancing your existing loan. Compare title insurance companies and lenders when you shop around. For example, your current bank or credit union may offer a loyalty discount for closing costs. Your lender might be willing to give a credit line to a lender in return for a slightly higher rate of interest. This could save you money depending on how long you intend to stay in your house. You may also want to reduce your initial costs.
Questions frequently asked
Title insurance is a waste of time?
It’s never fun to add an expense, but title insurance can provide you with the security that you can prevent future title problems completely by having a policy.
What is not covered under title insurance?
Title insurance doesn’t cover any damage to your home, or neglect due to deferred maintenance and repairs. To protect your home against events such as natural disasters, you will need to buy a separate homeowners policy .
Are there any other fees that can be negotiated?
The homeowner’s insurance premium must be paid at closing. Rate lock fees, origination fees, and lender credits are all negotiable.
