Selecting a Title Insurance Company: A Consumer’s Guide

By admin

As a soon-to-be homeowner, you know that real estate transactions have many moving parts. As if finding your dream home wasn’t difficult enough, now you have to find a title insurance company. Don’t worry – it’s not as complicated as it seems. Here’s what you need to know.

What is Title Insurance?

According to the American Land Title Association (ALTA):

• The purpose of title insurance is: “Helping the parties in real estate transactions to determine their rights and interests, and assuring that land transfer is expeditious and secure.”
• Before a title insurance commitment/policy is prepared, a title search is performed in order to “locate potential problems so that they can be rectified and the transfer can proceed.”
• “During the title search, title companies find and fix problems with the title in 25 percent of transactions – usually unbeknownst to the consumer or lender.”
• “Title companies pay millions of dollars each year in claims.”

What Does Title Insurance Cost?

Unlike other insurance policies, title insurance is purchased just once. There are no monthly premiums. The Owner’s Title Insurance Policy will appear as a line item within your closing costs on the ALTA settlement statement and/or the bank’s Closing Disclosure (CD). Title insurance typically costs somewhere near 0.5% of the purchase price of the home, however it is mandated by a rate code in several states. This does not include title search (in some states), examination, settlement, recordation and other potential costs pursuant to the closing that must be charged by your title company.

How to Select a Title Company

The ultimate decision for choosing a title company is up to you, the consumer. But knowing exactly what to look for can be a challenge. Here’s a few things you should look for in your title company.

1. They are Approved by more than One Underwriter

Different underwriters see risk in different ways. Let’s say your title company has only one underwriter. If there is a potential risk and the underwriter does not approve of it, the deal may not close. A title company that is approved by more than one underwriter has greater flexibility and can match your deal to the underwriter most appropriate to your deal.

2. They are Experienced with Purchase Transactions

The more experienced your title company has with your kind of transaction, the better. Purchase transactions require the coordination of the lender, realtor, title company, buyer and seller. If your title company works at high volume on purchase transactions, you know you won’t be paying them for “on the job training.” Ask how many purchase transactions your agent has performed to get an accurate picture.

3. They are Excellent Communicators

When you call them, they always pick up or call you right back. They are always responsive and looking for ways to help.

4. They Try to Save You Money

Are they taking advantage of any bundle or discount rates that affect your deal?  Competitive rates do not mean sacrificing quality. But it’s important to know that the agent is providing the best available rates and bundles, including taking advantage of reissue rates when available.

5. They are Proactive

Good title companies deal with issues proactively, solving potential complications before they have a negative impact on your purchase. Simple real estate deals are just that –simple. You want a title company that consistently guides complex transactions to the closing free of delays and/or complications.