How to Save on Title Insurance

Any time there is a transfer of title of property to another, the seller usually guarantees or warranties that the chain of title is not cloudy. The title company researches the chain of title back to about 50 years in the public records, making sure that there are no liens or encumbrances other than the existing loan if any, If no encumbrances are found they issue a title insurance policy .

THE MAGIC WORDS ARE (RE-ISSUE RATE)

As a rule of thumb, the longer you own your property the more expensive the policy. In light of that, let's say you bought your home six months ago and decided to sell or refinance. What chances could there be that the title is cloudy? The answer is, hardly any risk at all. Therefore, ask for a Re-Issue Rate from the title company. The Re-Issue Rate is a discounted price about (40%) of the policy premium. It is not relevant if the subject property was insured by another title company within the last few years, ask for the Re-Issue Rate and save.

WHAT IS A (HOLD-OPEN POLICY?)

This is powerful stuff, particularly for the investor. If your intentions are to sell within a year of your purchase date, ask the title company for a hold-open policy. For an additional fee, perhaps 10% of the policy, the title company will hold a title commitment for a year or more. This means the title company will not issue a policy on the first transfer from the seller to you the buyer. Instead, they will issue the policy on the second transaction a year later. Typically, the seller pays for the title insurance and you, the buyer pays an additional 10%. You will have a savings of 90% savings a year later. It’s true, knowledge is power, especially for the consumer.