Title insurance - crossposted

[kam]

X-posted from WC.

I have two brokers and I haven't made a decision as to who we're using yet (can't lock in until 60 days so we have time). One has a title insurance quote of $300. The other has a title insurance quote of $1200.

The first is pretty accurate, according to our soon-to-be neighbors and my brother who closed on his house last year (he's also in NC). The second, according to the broker, is definite. She also tried to tell me that title insurance doesn't vary (um, yes it does: http://moneycentral.msn.com/content/Banking/Homefinancing/P107741.asp).

I think the difference is state. Connecticut, despite being the insurance capital, is expensive for insurance. That's where the second broker is located. North Carolina, on the other hand, tends to be cheap - that's where the first broker is located.

I thought the requirements might have had an impact as well but it seems both states require the buyer and the lender to have mortgage insurance.

Before writing back to her, anyone here have any input on this?

Her email:
"Title insurance is going to be the same premium no matter where you go. Unfortunately some institutions do not quote accurately on their Good Faith Estimates to make them more appealing."

My response (not sent):
"I thought title insurance depended on the carrier, lender and the state you are in. In fact, my research indicates that title insurance is the most inconsistent cost in the closing. I'm thinking perhaps the difference may be the state you're located in (since the other broker is in NC) and the carrier you're using.

My brother paid $400 in the state of NC with a NC lender. A friend who just bought a house in Clinton, CT just spent $1000. Our soon-to-be neighbors actually helped us to determine that the $300 quote was accurate since he used this broker as well. He also indicated that his good faith estimate was actually within $20 of the actual closing costs so I am not concerned that the other broker is underestimating these costs.

I'm trying to determine, then, why the difference is so large. Can you confirm that it's perhaps the insurance carrier?"

Any input is appreciated! Even if you let me know what you paid and your location, at least I can know if this broker is a scam artist (which honestly I'm leaning towards since her information was off in explaining title insurance) or if she just doesn't know any better.

[notkk]

I vote she is a (dumb) scam artist.

I can't remember exactly what we paid for title insurance on our current place and don't have the estimate in front of me for the new place (closing this week) - but both are/were in the $250-400 range (our first place was a townhome and wasn't as expensive). Both of our properties and the title insurance company (used the same one both times) are in Minnesota.

ETA: I just got off the phone with our mortgage broker getting some other numbers and she told me that the title insurance this time around is only $142. It feels like an exceptional bargain after reading about your $1000 quote. ;)

[kam]

Thanks for your input. That was my feeling too.

BTW - I love the bucky avatar!

[citrus619]

I live and work in CT as a real estate paralegal. Title Insurance here is based on purchase price and/or mortgage amount and is set by the State of CT.

One example - if you were buying a home for $500,000, title insurance would be $1,690.00 (60% of this actually goes to the closing attorney).

If you were refinancing and your new mortgage amt is $500,000.00, title insurance is $1,520.00. If you are refinancing the same property within 10 years of prior Title Insurance (from when you purchased or a previous refi) then you get a 60% discount up to the amt of the existing insurance.

[kam]

Thanks so much citrus! So it sounds like this woman thinks it must be the same everywhere because it's that way in CT? I assume it's the location of the lender, not the buyer, which determines the rate?

Also, based on the calculation, mine still seems high since our mortgage is half of your example. Do you have any links for info which I can use in my response to her? Thanks again for your input!

[citrus619]

I think it would go by what State the property is located.

Go to http://www.oldrepublictitle.com/national/Index.asp. This is the National site for our title insurance co. You can pick a State or Region from the pull down menu on the top right, once you get to the local sitethere should be a rate calculator for that State.

Let me know if you need any help, you can email me too if its easier.

[citrus619]

I just wanted to add, in CT (and I'm not sure if this is the same in every state) if you are purchasing a home, you would go by the purchase price to find the premium, not the mortgage amount, because you are required to have both title insurance for both mortgage and owners on a purchase.

Example: If you were purchasing a home for $500,000 and your mortgage was $100,000 you would base the premium on $500,000.

[kam]

Thanks Citrus! I checked out the website and, low and behold, CT was about 3x the amount of NC. My brother called me last night with an amount he paid - $385. Considering his house is worth more than mine, that makes a whole lot of sense. We'll see how the broker responds, if at all. Her response may determine who we use, depending on if their rates are basically the same. Thanks again!

[citrus619]

I'm glad I was ablt to help! Good Luck!

[BrownEyedGirl]

I agree that the rate is based on the amount of the house and the location of the house...not the broker.

We just closed on a house last week with a broker in KA and the house is in MN. Here the owner & lender's title insurance is to be paid by the buyer. I think a lot of times the mortgage brokers just guess at some numbers...since they aren't the ones determining the insurance cost...it would probably change by closing.

If you need another broker option...I really liked the guy I worked with (he's closed a bunch of people from my office)

Let me know if you want his info and I'll send it to you.

[kam]

Thanks all. I got a response from the broker and she said that when she said it was a standard amount, she apparently meant that's the standard amount she quotes. She indicated she always quotes high because she doesn't know the area's standards until she gets a quote. Uh huh. I'm taking everything she says with a grain of salt at this point. Also - thanks Bree. I have so many people offering their brokers, I honestly think I'm all stocked up at this point!

[citrus619]

In the Broker's defense, I do see this all the time - the Broker/Bank will quote a high estimate # just to get something on the Good Faith Estimate and then it gets adjusted at closing. I am not sure why she didn't tell you this from the beginning (I should have mentioned this before too) Again, I am not sure how it works in other states, but in CT the Bank/Broker makes NO money off the title insurance nor are they even involved in any aspect of getting it, etc. The Bank requires you have it and wants proof that you do. The rates are set by the State and the premium gets split - 60% to the closing attorney(as agent for the title company) and 40% to the title company. So the Broker/Bank has no real interest in the price you are paying for the premium.

[kam]

I totally understand that citrus - my issue is that she said "it's the same no matter where you go" when all she had to say was "it's an estimate which I need to make high to make sure you aren't surprised".

I think the problem is this is the third problem where she tells me the answer before I ask the question and then doesn't truly try to understand what I'm asking.

But I hear you. I will try to cut her some slack but this is the third instance of a "miscommunication".

[citrus619]

I totally agree with you, I don't know why she didn't just tell you it was an estimate from the beginning.