In our last blog post we talked about the necessity of buying title insurance for your home purchase. Now, we want to discuss the cost of title insurance, how it is calculated and how a little legwork on your part can save you money.
The title insurance industry is unique in that regulation by the state serves as a natural check on profits. Rates by title companies are ultimately set in response to competition in the marketplace. However, if the competition does not lead to fair rates, the state steps in stating that rates cannot be “excessive, inadequate, or unfairly discriminatory”.
There are a number of things you can do to monitor the cost of your title insurance. Below are five steps you can take.
- Do your research. Title insurance is a two-part transaction. The first part covers the property’s history to determine if there are any unpaid loans or liens. The second part insures you against future discoveries or problems with the property. Insurance companies are allowed to set their own rates, so it pays to spend some time comparing policies to make sure you get the best possible deal. Visit Home Closing 101 to find title insurance companies in Colorado Springs who are members of the American Land Title Association.
- Ask about add-on fees. These may include mail and courier charges, copy fees and fees for searches and certificates. You have the right to ask a company to reduce or drop these fees.
- Ask about a “re issue rate.” If your home has been refinanced or sold within the last 5 years, you may qualify for discounts up to 50%.
- Ask about Endorsements. An endorsement is a rider attached to a Mortgage or an Owner policy to expand or limit the policy coverage. Attaching an endorsement to the policy adapts the coverage to meet the needs of the insured. Examples of common endorsements are: Condominium Endorsement, Mineral Endorsement, Encroachments on Easements, just to mention a few. By issuing an endorsement, the insurer may take on additional risk normally not covered under the policy. A premium is usually charged for issuing any endorsement.
- Don’t rely on a single recommendation from your real estate agent. Ask for two or three companies that he or she recommends.
For a list of title insurance companies in Colorado and their fee schedules visit DORA or Colorado Department of Regulatory Agencies or Network Closing.