Your local title insurance company will conduct an extensive search of public records, known as a title search, to verify the seller’s legal right to transfer ownership to the homebuyer. The purpose of the title search is to discover title claims or defects (a.k.a. “clouds”) that limit the homeowner’s right in transferring the property.
Once a title company has reviewed the record and confirmed a clean chain of title, it will issue an owner’s title insurance policy to the homebuyer. For a one-time fee, this policy protects the homebuyer’s down payment along with any mortgage payments made or funds invested into the property should a title matter arise down the road.
Approximately 1/3 of properties have a title issue arise, usually at time of sale or refinance, however most homeowners never hear about it because their owner’s title insurance policy covers them.
We certainly think so, and most consumers would agree.
The title company is supposed to be an unbiased third party primarily looking out for the best interests of the homebuyer.
Sometimes, real estate brokerages will purchase a title company or real estate agents will create joint ventures with a title company, which not only eliminates the unbias element of an independent third-party, replacing it with a significant conflict of interest, these arrangements tend to jack up closing costs for consumers.
Whatever title company you choose, make sure you choose an independent title company for your real estate settlement. And if you value exceptional service and low fees, consider choosing Federal Title as your closing services provider.
For starters, go to the websites of local title companies and get a quote. Most have an online quote tool now, although Federal Title was the first.
Second, understand there are 3 types of costs that appear on a title company quote. They are title fees, title insurance premiums and taxes. Taxes are the same across the board. Title insurance premiums are generally the same across the board because they are filed with DC, Maryland or Virginia. However, title insurance underwriters may file different rates in an effort to compete with each other. Depending on the title insurance underwriter, a title company quote may show some variance in the title insurance premium. You can also ask the title company if they use a title insurance underwriter with a lower title insurance rate on file.
Where you’ll find the most significant variance is in the title or settlement fees. Federal Title’s settlement fee is all-inclusive, but most title companies itemize and nickel and dime. Tabulate all the fees in the title company quote for a real apples-to-apples cost comparison of local title companies.
Finally, note how many other title companies you encounter are as transparent about their fees as Federal Title. We sincerely encourage you to shop fees among local title companies, because we believe in providing excellent service at a competitive price.
These days consumers expect every aspect of their real estate transactions to be digitized. The industry is moving that way but hasn’t fully converted. Sellers and all-cash buyers, plus borrowers with lender approval, can close remotely with Federal Title attorneys.
Legislation to permit remote closing (a.k.a. digital closing) nationally has already passed the House, and we anxiously await passage in the Senate as of summer 2022 so we can begin offering remote closings to all.