Am I Really Getting a Good Deal on my Refinance Costs? Comparing “Caramel Apples to Caramel Apples” for your Refinance Title Related Expenses. (“Halloween” Edition!)
Am I Really Getting a Good Deal on my Refinance Costs?
Comparing “Caramel Apples to Caramel Apples” for your Refinance Title Related Expenses
With the interest rates at historic lows again this Halloween Season, many homeowners are considering refinancing their property and are looking to do so as inexpensively as possible. Efforts to become an Informed Consumer by obtaining quotes from title companies to compare costs , however, are usually met with a spooky Corn Maze of strange numbers and terms which leave them more confused than informed! They will then often jump at an offer for an apparent “discount” when in fact their total title costs are going up! Don’t get Spooked!
There are two distinct elements which make up the title-related costs to the consumer at a refinance settlement: 1.) Title Service Fees; and 2.) Lender’s Title Insurance Premium. Both of these costs are reflected as one figure in Box 4 of the Good Faith Estimate borrower’s receive from their lender and on Line 1101 of the Settlement Statement (Hud-1) provided at closing. When comparing costs related to the settlement, it is important that the borrower have an understanding of both of these figures.
The Title fees consist of any and all fees or expenses charged by the title company for conducting the settlement and typically include a Settlement fee, Title examination, the cost of the Title abstract, release fees, notary charges and other miscellaneous items. At Counselors, we pioneered One Fee pricing in this regard ($799 in the case of refinances), and many other title companies have now followed suit. However, many other companies will quote a smaller fee, such as just their Settlement fee, only to include additional charges for the other services in a different way or place. It is important that the borrower obtain a solid number which reflects ALL title related costs to make an informed choice. As indicated, Counselors Title makes it easy by giving you that figure up front, so you always know where you stand.
In almost all circumstances, mortgage lenders will require that the borrower obtain and pay for a lender’s title insurance policy insuring the lender which is issued by the title company as agent for the Title Insurance company. This is required even if the borrower already has an existing owner’s title insurance policy protecting their personal ownership interest. The amount of the premium for the issuance of such a policy is based upon the amount of the loan. In most jurisdictions, the premium rates must be filed with the appropriate insurance commissioner; so one would think that there would not be a lot of variance between companies. However, many title insurance companies offer a Refinance Rate which typically provides up to a 40% savings to the regular lender’s title insurance rates. For those insurers that do not provide a Refinance Rate, there is the possibility that a Reissue Discount may exist to reduce the premium based upon a prior title insurance policy being in existence. Borrowers should be careful to inquire with the company providing any quotes to see whether a Refinance Rate or Reissue Discount is applicable and that the figure they are being provided for the title insurance premium reflects any available discounts. At Counselors, we always apply the Refinance Rate to ensure the maximum title insurance premium savings for the consumer.
In summary, an educated and informed Borrower can ensure maximum savings in the refinance process by understanding and inquiring into all of the title related costs. However, at Counselors, we make this process easy and as transparent as a ghost to ensure our clients maximum savings from a leader in the title industry!
Happy Halloween, Everyone!!