When buying a home or refinancing your existing mortgage, you should ask whether you are entitled to a title insurance discount. Reduced premiums are often available, yet usually are not volunteered or offered. When considering how much that insurance can cost, it is worth it to find out.
First, there are two types of title insurance: Lenders’ and Owners’. Lenders’ insurance guarantees the lender to have a valid (usually) first lien, and protects your lender against any loss that might occur due to unknown title defects. Owners’ insurance generally protects the buyer from title issues that might emerge after the sale. Since lenders’ insurance is a nominal sum (often around $50-100), it is Owners’ insurance that discounts are applicable to.
When buying a home, you may be entitled to an “investor” rate if you are a builder, contractor, developer, real estate agent, mortgage broker, or attorney, or a frequent purchaser (customarily engaged in real estate investments for the production of income and profit). Also, if you bought using the same title company recently (for example, within the last five years), a “short-term rate” may apply.
In addition, some title insurance companies offer discounts to first-time home buyers, senior citizens, non-profit/charitable organizations, and first responders (police officer, firefighter, emergency medical personnel, active duty military or national guard).
When refinancing your mortgage, ask about the “reissue rate.” A reissue is an extension of a current policy at a reduced premium. Obviously you must use the same title insurance company in order to qualify. Provide the escrow officer a copy of the policy to be extended, or the escrow number of the prior transaction (it’s on the settlement statement). Keep in mind that title insurers restrict the eligibility period in which a reissue discount is available.
Why bother to ask? On a $400,000 purchase, the owner’s policy premium is around $1,500-1,600. With discounts ranging from 5 to 60%, a reduction to this cost could mean a significant savings.
To learn more about title insurance, Wikipedia has a decent description and summary at http://en.wikipedia.org/wiki/Title_insurance. For more in-depth study of the subject, the American Land Title Association has industry related information and examples of title policy forms, at http://www.alta.org.
I ask for title insurance discounts on behalf of my clients. And there are other ways to save money in purchases in the metro Phoenix area. If you would like to know more, contact me at firstname.lastname@example.org.