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WHEN Tom Strange, a retired computer engineer in Henderson,Nevada, refinanced his mortgage last year, he rejected the $1,870 title insurance offered by his mortgage broker.
Searching online, he cut the cost by half. "It was worth it," said Strange, 63, who said he saved almost $1,000. "I don't know how many people are aware of it. I never would have guessed."
Homebuyers generally are required to purchase title insurance in the amount of the mortgage to protect lenders against t claims on the property, such as prior liens. It's a onetime cost usually paid at closing. Most buyers use the insurer their lender or lawyer recommends, though a 1974 federal law gives purchasers the right to choose.
More homeowners like Strange may opt to shop for title insurance because they now receive a summary of their closing costs earlier in the buying process. It's been required by law since January 2010 that lenders must provide accurate closing costs within three business days of receiving a mortgage application.
"The new law absolutely has prompted an increase in consumer shopping across the board," said Timothy Dwyer of Entitle Direct Group, a title insurer based in Stamford, Connecticut. "A consumer who has an estimate can compare and contrast the charges."
The savings can be substantial. For a $1.5 million home purchase in New York, with a 20 per cent down payment, Entitle Direct, which sells directly to consumers without using agents, charges $4,973 for owner and lender policies compared with $7,650 for the same policies sold by many traditional insurers, according to their rate manual.
Buyers in other areas may not see similar savings because each state regulates the industry differently. Texas and New Mexico set rates for all insurers, while states including California,Maryland and Nevada approve individual rates.
Title insurers underwrite policies that protect the property from unforeseen claims. They, or the agents who sell the policies, conduct a land records search to make sure the property history is clean. The insurance pays for expenses related to defending against claims on the property and covers any valid claims. Homeowners who are refinancing are usually required to buy a policy, often for a lower rate.
Source :- mydigitalfc
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