Title insurance protects both homebuyers and lenders from the possibility that a seller may not have clear ownership of the house and property they’re selling, therefore making the seller unable to transfer full ownership to the buyer. Important note: information like this usually is not disclosed in public records!
Learn About Florida Title Insurance
With the exception of Sarasota, Collier, Miami-Dade and Broward counties, in every other Florida county, the seller picks and pays for the title costs. It is always a good idea to shop around for the best price and policy before settling with a title insurance company.
It depends. A mortgage lender will require the purchase of a lender’s title insurance policy if you’re taking out a loan to purchase your home. This policy is also known as a lender title insurance policy because it safeguards the lender for the full amount of the home loan.
An owner’s title insurance policy is an optional purchase. This policy is an important one, in our opinion, because it protects the homebuyer for the full amount of the property’s value. Unlike the lender’s title insurance policy which only protects the lender’s investment in the property.
Most insurance policies are purchased to protect you in the future, but title insurance is explicitly made to safeguard you against past title problems that become apparent after you’ve closed on your home. Misplaced, forged, or falsely filed deeds, as well as any liens on a property or access issues, are only a few examples of title issues that may be hidden at the time of closing.
The big picture is, buying an owner’s title insurance policy is a few hundred to several hundred dollars more you have to pay at closing. However, the risk of going without this protection can cost you hundreds of thousands to potentially millions of dollars down the line.
Not having an owner’s title insurance can leave you hanging out to dry when settling the dispute over your title, and legal expenses and other costs start to pile up. What’s worse is, if you lose the case defending your title, you could lose your home. Having an owner’s title insurance policy means one of the biggest investments you’ve made, your home, is protected by a multi-billion dollar insurance underwriter and its entire legal department. It also guarantees if anyone makes a title claim on your home, that you will be covered and compensated for any losses at no additional cost to you.
We offer two types of owner’s title insurance policies: Standard and the Enhanced.
Standard title insurance is perfectly acceptable coverage for most cases. It protects against issues that should have been singled out and dealt with prior to closing.
For an additional 20%, an Enhanced owner’s title insurance policy offers the same coverage plus protection against several post-closing issues. This level of coverage isn’t commonly necessary. We recommend consulting with your title attorney or closing agent to better determine the right policy for your real estate purchase.
Not always. Title insurance underwriters are required by law to file their rates with the states wherein they insure titles. Title companies that are agents of the same underwriter will charge the same title insurance premiums. Title companies that are agents of multiple underwriters (this gives them the ability to file policies in different jurisdictions) can have different filing rates. Thus, it is a good idea to shop around and compare title companies before making a final decision.
Title companies are required by the state insurance commissioners to file their rates every year, but they are not all required to file the same rates. Title companies vary in their operational costs and paid claims and as a result, their title services fees vary as well. Again, shop around and compare title companies first before making a final decision.
Ask your title company about a Reissue Rate discount. This discount depends on your title insurance underwriter as well as a property’s location, but the pay off is that it lowers policy premiums up to 40%.
If you purchase the lender’s and owner’s title insurance policies together, you will be offered a Simultaneous Issue Rate. The majority of homebuyers don’t realize they’re receiving this rate until they opt out of purchasing the owner’s policy, and their final costs for lender’s title insurance spike as a result.
The best way to save money on closing costs is to shop around for title insurance companies and compare title insurance premiums and title service fees. Title insurance makes up about 30% of a closing’s costs—but the cost can be held lower with some judicious shopping.
The other two major charges are relatively inflexible: 55% goes for taxes paid at closing based on the purchase price. The remaining 15% is reserved for loan costs and lender’s costs, which are required by law to remain the same throughout the entire transaction (changes incur stiff penalties).
Another way to save money on closing costs is to select a Standard title insurance policy in lieu of Enhanced. (Though we highly recommend consulting with a closing agent first before making that decision.). Several title companies will quote their higher-priced Enhanced policy, without any mention of their less expensive Standard policy so it’s very important to request it. A Standard policy could save up to 15% off a title insurance premium.
Use the Internet to see general prices from multiple title companies and compare. Many title companies have online tools that generate quotes for their title insurance so it’s a pretty fast process. This small but useful technological advance is so common that if a company doesn’t have it, treat that as an immediate red flag and look elsewhere.
Shopping around and comparing quotes is an excellent way to become familiar with the way closing costs are supposed to look and what prices to expect. It will get easier to pick up on tricks title companies play to keep their prices as “low.” For example, some title companies will advertise a very low fee for their title service then hide the costs for a variety of other, often necessary title services in the fine print.
Always ask what is included in a title company’s title service fees or, simply ask if their fee is all-inclusive. It makes it easier to do a side-by-side comparison on a short list of title companies and make an informed decision.
Agents and lenders often make referrals to title companies, but just as often they may be referring homebuyers to a title company affiliated with their company. This is called an Affiliated Business Arrangement (ABA), or Marketing Service Agreement (MSA), and choosing a title company that participates in ABAs or MSAs is far more expensive than one that doesn’t. Why? The ABA/MSA pays the agent’s or lender’s companies for the referral and that extra money comes out of a homebuyer’s bill.
Over the past few years, the federal government has tried to combat this by pushing title companies to clearly outline their fees. Consumers who do their research to learn exactly what they’re getting into when buying a home with a bank loan will find their efforts are rewarded. This research is getting easier to do every day as more and more title companies put their information and free quote tools online.
An Affiliated Business Arrangement (ABA) is when a title company motivates business referral sources to recommend them by offering a portion of the profit from each closing they refer. It’s considered legal if the business relationship is clearly explained in a consumer’s closing documents. However, even though there’s a clear explanation of the business relationship in the closing documents, research has proven that the majority of homebuyers have no clue how the relationship will affect their closing costs. That same research went on to discover that once homebuyers were properly informed of an ABA’s affect on their closing, the majority chose a proven, independent title company not involved in an ABA/MSA.
A Marketing Service Agreement (MSA) is a close relative of an ABA. This occurs when a title company motivates business referral sources to recommend them by financing all or a part of the referral source’s marketing expenses. E.g. a local real estate company could put up advertisements around the city paid for by their “recommended” title company. MSAs have been under growing investigation because their terms are on the borderline of violating the Real Estate Settlement Procedure Act (RESPA). RESPA prohibits title agents from offering referral sources “a thing of value” to receive business. This applies to lenders as well.
The bottom line: title companies involved in ABAs or MSAs share a cut of the profit from their closing costs with their referral sources and pass those added referral costs on to their homebuyer.
Lenders must cover a home’s original home loan in a refinance before granting a new one. The new loan requires its own title search and title insurance policy to give it coverage. On the bright side, purchase of a new owner’s title insurance policy will not be necessary.
It couldn’t be easier. Just click here to contact us, and we’ll take care of the rest. No money is exchanged until the final day of closing. Leave a message with any questions or concerns and we will get back to you promptly.