YOU have the RIGHT to choose your own Title Company!
Federal law guarantees you the right to choose the title company that will handle your real estate transaction-whether it is a cash sale, purchase/sale with a new mortgage or a refinance.
As this will probably be one of the most important financial transactions of your life, you should carefully research who you will be entrusting with your money and the ownership of your home. Depending on the price of your home and/or the size of your loan, you will probably be paying $500.00 to $2,500.00 for title and closing services; would you make any other purchase that size without shopping around?
By all means listen to your real estate agent or lender, but call around, ask questions and get comfortable with the people who are going to handle what is probably the biggest financial transaction of your life! The more information you have, the more control you’ll have over the outcome. It’s your choice!
Closing a real estate transaction and solving title problems often requires fairly sophisticated interpersonal and legal skills. You need a title company that is experienced, competent and familiar with local custom and practice. An established local agency – with attorneys and underwriting staff available in their office – probably is your best bet to insure a smooth closing.
The following is information you may want to know as you go about selecting a title company and how title and closing services are Sold/Performed.
Who Pays and Who Chooses?
Title insurance and closing fees are one-time costs on the transaction. In Texas, tradition is that the seller pays for the Owner’s Policy which insures the purchaser, and the purchaser pays for the Lender’s Policy that insures the lender for the mortgage. The seller has traditionally selected the title and closing agent because they need to show their ownership of the Property. The other reason the seller has traditionally chosen the title company is that at the end of the closing virtually all of the money that is on deposit with the closing agent belongs to the Seller, either in proceeds, payoffs of existing mortgages or payments such as Brokerage Commissions and Transfer Taxes that are obligations of the Seller. They want to be confident that the escrow agent holding their money is a company they can trust.
Pricing and Closing Costs
In Texas, both underwriters and agents are obligated to charge title insurance rates that have been filed and approved by the Texas Department of Insurance. This is the entity that regulates the Texas industry. In addition to title insurance, title companies charge closing fees. Closing fees are the fees associated with creating the settlement statements, managing the loan documentation, paying off liens, commissions, and other “costs” incurred to get to settlement. They also include fees to make sure that deeds and mortgages are recorded timely and correctly. These fees are not regulated and vary from company to company, county to county and state to state. These fees are sometimes “all inclusive”, with one fee covering everything that the title company does-preparation of closing document, conducting the closing, as well as expenses such as overnight fees, wire fees, fees charged by municipalities etc. Other firms often charge for each item individually. Ask and get quotes and compare them, especially if your lender has provided you with a “Good Faith Estimate or “GFE”. Beware, however of lenders that do not charge “closing fees” or who have “zero cost” loans who try to steer you to title companies where they have a financial stake – the fees could be buried in a higher interest rate. The money is still collected and internally transferred to their title agency. You may want to compare the “no cost” loan to another company that offers a rate plus “fees” to be certain you are getting a good deal.
What Is Escrow?Think of escrow as your middleman or the neutral zone between two parties during real estate transactions. An escrow company can hold deeds, bonds, money, or even a piece of property on behalf of the original owner and then release it once all obligations have been met by both parties. By hiring an escrow company, the buyer is required to put up the funds or whatever is being offered from his/her end, but the seller does not receive that money or property until the agreed-upon conditions have been met.
How It Works?In practice, escrow services aim to protect the interests of all parties involved in a particular real estate transaction. From the buyer's side, having an escrow account guarantees that you will actually get what you pay for and to ensure that the terms and conditions of the transaction are adhered to. Escrow agents are tasked with holding all critical documents and deposits and guiding the involved parties through working out details. An escrow agent is a neutral third-party who can facilitate communication and finalize even the most difficult transactions. Escrow agents are also trained to manage the paperwork required to make the transaction legitimate and final. Following the closing of a real estate deal, an escrow officer will oversee that all documents required to close a transaction are provided for proper recordation.
What Does An Escrow Agent Do?Some of the biggest tasks an escrow holder will compete on behlaf of the parties are: Coordinating communications between all parties in the transaction Preparing written escrow instructions Requesting a preliminary report or commitment Requesting a statement of identity (information) from the buyer or seller as needed Ordering demands or beneficiary statements Receiving bills from home warranty companies, as well as pest, roof, home and other inspection companies Preparing or securing the deed or other recordable documents Complying with lender’s requirements Prorating taxes, interest, insurance and rents Receiving purchase funds required for closing Coordinating recording of deeds and any other necessary documents Closing escrow when all the instructions of the buyer, seller and lender have been carried out Disbursing funds as authorized, including charges for title insurance, recording fees, real estate commissions and loan payoffs Preparing final statements for the parties, which account for the disposition of all funds deposited in escrow
What Are My Benefits?When all the terms and conditions have been met, the escrow agent will disburse the funds to the seller and the property deed or asset title to the buyer. To make the transaction official, the escrow agent will also record the paperwork with the county and state so that the new property ownership is recognized by governing bodies. Both parties will also get their copy of an estimated final closing statement. Once received, make sure to check the contents of the statement for its accuracy. If any errors are identified, contact the closing agent immediately. If no errors are found, safely store the statement along with other vital paperwork. Knowing an experienced Real Estate agent and Escrow Officer are essential to the process of a fluid execution of your transaction.