DIY Title Search

The cost of acquiring a home can be ratcheted up significantly if the buyer doesn’t pick their own title-insurance company.

Today’s WSJ recommends trying out these internet alternatives: GetTitleInsurance, TitleInsurance, and EasyTitleQuote.

“While many home buyers defer to the expert advice of a broker or lender, [several state] commissioners warn that the advice can be biased,” says the WSJ.

More: Title Insurance: Shop Around for Prices [WSJ]

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  1. humphrmi says:

    I think that there are a couple of important things to note from this article. First, there are two types – one that protects the lender, that is generally mandated by the lender, and in many cases you do not have much choice over the provider. This is the case in Illinois. There is optional buyer protection that you can purchase, but generally this is something that you have to initiate yourself, so your costs for this would not neccessarily be “ratchetted up” if, as in most cases, you simply didn’t buy it. But the article also makes a good point that you probably should. This will add to your costs of buying the new house, but will protect you (vs. the lender) in case of title fraud, claims against the house, etc.
    Second, the required title insurance and who gets to pick the insurer is all outlined the in purchase contract or by your lender, before you run off hiring a third party, make sure you’re able to (or make sure you only sign contracts that allow you to).

  2. Anonymously says:

    The funny thing is that the Title Insurance companies often miscalculate the rates. In some states, individual underwriters can set their own rates. The underwriter provide paper/pdf rate manuals to the title insurance company which contain often over-complicated tables for calculating the rate.

    Does the Title Insurance company have the latest rate manual? Maybe not. Did the employee calculate the rate correctly? Maybe not. Some companies use software to compute the rates while others don’t.

    So anyway, the article has some good advice. Shop around, maybe you’ll get lucky and find a good rate.

  3. Sam Glover says:

    Sounds like a pretty valuable way to be extra-sure the chain of title is clear. I wasn’t aware that there was a big problem with differing interests, though. The bank has the most interest in not losing their investment, after all.

    However, as far as insurance goes, a buyer does stand to lose a significant expected investment if something goes awry with the chain of title. Might be worth picking up some extra insurance.

  4. Anonymously says:

    This is a good primer to what Title Insurance is and why you need it. With the possibility that someone can just appear out of nowhere and say “this is my house. here’s the papers to prove it”, I’m definitely getting an owner’s policy.

    As for what goes into to issuing the insurance: They search for any outstanding liens, mortgages, and unpaid taxes on the property. Depending on the type of transaction and the value of the property, they may look back a couple of years, 30 years, for the entire life of the property. In NJ they do what’s called an “upper court search” as well. Then they basically pay off or subordinate anyone that the home owner owes money to. This process ensures that the mortgagor / mortgagee is legally entitled to the property. 95% of the time, they clear the title well enough to avoid any claims against the insurance policy.

    What that means is the title insurance company and the underwriter split your premium as almost-pure profit. During the housing boom, these companies made more money than god from those premiums. We’re talking about the stereotypical “lighting cigars with 100 dollar bills” type of money. It also helps that they pay barely above minimum wage to do all of the grunt work.

    Once you sign the mortgage at the closing, it has to be recorded at the court house before it’s official. Some counties were so backed up that the underwriters had to issue “gap coverage” to cover cases where people would take out multiple mortgages on the same property before any of them were recorded. If the title insurance company forgets to record your mortgage…congratulations, you may have just won yourself a free house. It happens. I’m not sure how often, but it does.

    …and I’m sure that’s more than anyone wanted to know on the subject.

    • Anonymous says:

      @Greg P: No, you didn’t just win yourself a free house. There’s this thing called a NOTE that doesn’t get recorded; it still requires the mortgagor to repay the debt. And most mortgage closings produce at least 2, usually 3, properly executed ‘original’ mortgages. This is done specifically to protect the mortgagee in case of the loss of the mortgage in transit.

  5. Law-Vol says:

    Assuming you have a lender’s policy, a buyer’s policy shouldn’t be all that necessary. Yes, in a technical sense the Lender’s Policy protects the lender’s investment, but the penumbra of this protection extends to the buy, at least with respect to the cost of the home’s purchase.

    Beyond that, the deed warranties and the preparing attorney’s Errors & Omissions carrier are next in line.

  6. dwj119 says:

    Just and FYI, title insurance is required and regulated in the state of Pennsylvania.