Clarifying a common misconception: title insurance premiums

We've said it before, and we want to make it absolutely clear because we continue to get questions about title insurance premiums. Title insurance premiums are NOT created equal.

While you no doubt have heard that title insurance underwriters are legally required to file their rates with the local insurance commission, underwriters do not file identical rate schedules.

It is true that title companies who are agents of the same underwriter must charge the same title insurance premium. But sometimes title companies become agents of multiple underwriters, using one title insurance underwriter for one jurisdiction and a second underwriter in another jurisdiction, etc.

Federal Title is a prime example of this. We use different underwriters depending on the jurisdiction, allowing us to pass extended savings on to our homebuyers.

We receive calls fairly regularly from confused agents and lenders who are wondering why our Quick Quote reflects a title insurance premium on a Maryland property that is hundreds of dollars less than the other quotes. It's not because our quote is incorrect, it's because our underwriter charges a lower premium.

That title insurance premiums are created equal is a common misconception we wish to clarify for our agents and lenders, because we believe they are our best ally when it comes to looking out for the best interest of our homebuyers.

Refinancing home loan will require new lender's title insurance policy

Refinancing home loan will require new lender's title insurance policy

For those who closed with Federal Title in the recent past and who may be considering refinancing their mortgage, we'd like to let you know we can provide you substantial savings on your closing costs.

In addition to providing a reissue rate discount on your title insurance premium, Federal Title also offers repeat clients a $200 credit applied toward settlement fees. When you order settlement services through our website, you can save an additional $100.

We'd like to remind you that it's your legal right to choose your own settlement service provider. Often times borrowers are not aware or informed of this right and end up spending more on closing costs than they should.

Get a free and anonymous Quick Quote from us and see how it stacks up to your mortgage lender's title company.

As you may know, we are the leading independent title company serving the DC metro area, and our settlements are conducted by licensed attorneys – not inexperienced notaries. Our online reviews tell our story.

Your title insurance policy covers you more than you may realize

Even the most diligent of title searches cannot uncover 100 percent of title defects 100 percent of the time. Title insurance not only covers mistakes made during a title search, it covers many more issues that a title search may not reveal. 

Sometimes tardy record keeping at the government clerk's office is to blame. Other times, it may be a forged document. No matter what the issue may be, without title insurance the homeowner will be on the hook for any costs to defend title as well as any losses incurred.

While it's true that the title insurance claims rate is somewhere around 5 percent – relatively low in comparison to other forms of insurance – this number can be somewhat misleading. That's because a lot goes on behind the scenes at the title company to ensure a smooth, stress-free closing. The behind-the-scenes work doesn't always show up in the statistics.

When a title cloud is detected prior to a real estate closing, the title company-to-insure contacts the title company who handled the original settlement on behalf of the seller. In our experience, this occurs in about one out of every 10 transactions. When it does, we're usually able to resolve the issue without having to alert the seller or report a claim.

Keeping in mind that an owner's title policy ranges on average around $1,100 for a house in the District of Columbia, and the cost of legal fees to clear title could run into the tens of thousands of dollars, it just seems like good fiscal sense to purchase the added protection.

How to estimate closing costs when buying a new home

The searching is over. The bank has been contacted. The offer has been accepted, and now the dream of owning your new home is coming to fruition. So, what are the typical closings fees that you can expect to pay as part of your upcoming settlement?

Let’s take a look at what some of the typical closing costs are that you can expect to pay before the keys to your new home are placed in your hands:

Lender Fees

Typical fees that you can expect to pay to your lender for originating your mortgage:

  • Loan origination fee. Fee charged by the lender to originate your mortgage, and is typically 1%-2% of the loan amount, depending on the lender you select and the loan program for which you qualify.

  • Application and underwriting fees. Fees charged by the lender to process your loan application and underwrite the loan. These fees are typically rolled into the total Loan origination fee.

  • Appraisal fee. Fee charged by the lender to have your pending new home appraised to ensure the value of the home is equal to or exceeds the purchase price of the property and the loan amount you are requesting.

  • Tax service fee. Fee charged by the lender to have an independent company ensure there are no delinquent taxes or outstanding tax liens against your property.

  • Flood certification fee. Fee charged by the lender to ensure your new home is not located in a flood zone, and therefore there is no requirement for flood insurance.

  • Credit report fee. Fee charged by the lender to ensure that you are credit worthy of being given a loan and that your financial liabilities do not exceed your financial assets.

  • Interim interest. Mortgage payments always pay for interest in arrears. Interim interest is therefore charged by the lender from the date of settlement until the end of the month. For example, if you close on August 15th, you will pay interim interest from August 15th through August 31st, and your first mortgage payment will be due on October 1st. Your October 1st mortgage payment will therefore pay for all the interest accrued in September.

  • Escrows. Whether your lender requires it or you choose to have an escrow account to pay your homeowner’s insurance and property taxes, you will be required to establish your account at the time of settlement. Depending on how close your settlement date is to the next due date for your property taxes, depends on the number of months that the lender will need to collect. However, the lender will need to collect at least 2 months for the buffer they keep in the account at all times.

Settlement/Title Company Fees

Fees that are typically paid to the title company to search the title of the property and issue an owner’s and lender’s title insurance policy:

  • Settlement fee. Fee charged by the title company to conduct your settlement. Under the new Real Estate Settlement Procedures Act (RESPA) guidelines, this fee now also includes the costs for any title search, courier fee, notary fees, etc.

  • Owner’s Title Insurance fee. Cost of owner’s title insurance to protect you, as an owner, against title claims that could arise against the property. You typically have the option of selecting either the standard policy or enhanced policy. Our title policy a comparison chart outlines the major differences between coverages. The cost is determined by the purchase price.

  • Lender’s Title Insurance fee. Cost of lender’s title insurance policy to protect the lender against title claims that could arise against the property. The cost is dependent upon the loan amount.

Government Fees

Fees that are paid to the state and local government of the jurisdiction in which the property is located to record your deed and mortgage and transfer the property:

  • Recording fees. Fees charged to record your deed and mortgage. Said fees vary depending on the jurisdiction in which the property is located. Recording fees are also charged to record any releases for any current/prior mortgages found against the property, to record any Powers of Attorney used by any party to the transaction at the time of settlement, etc.

  • Transfer/recordation taxes. Fees charged by the state/local government to transfer title to the property.

Miscellaneous Fees 

Fees that are paid to third parties for inspections, surveys, etc.:

  • Termite inspection. Fee paid to inspect the property for any termite or other bug damage.

  • Survey. Fee paid to have a location survey done of the property to ensure there are no boundary line issues.

  • Condo/HOA Dues. If the property is in a condominium association or homeowner’s association, dues are typically required to be paid for the upcoming month. For example, if you purchase the property in August, the dues for September will typically be required to be collected at the time of settlement.

  • Condo/HOA transfer fees. The condominium or homeowner’s association management company may charge a fee to transfer the property account from the seller to the new purchaser.


Charges that have been or will be paid by one party to the transaction that are reimbursed by the other party to the transaction.

  • Tax prorations. Property taxes are prorated between buyer and seller depending on when the last tax bill was paid and when the next bill is due. Tax prorations are dependent on the jurisdiction in which the property is located, as each jurisdiction has different tax due dates and tax periods.

  • Condo/HOA dues. Any condominium or homeowner’s association dues are prorated between buyer and seller based on the last month paid. For example, if you are settling on August 15th, and the seller has already paid the August dues, the buyer would reimburse the seller for the dues already paid from August 15th through the 31st for the time the buyer will own the property.

All of these fees can be overwhelming; however, all of these closing costs will be disclosed to you by your lender in your Good Faith Estimate (GFE).

In addition, if you want to get ahead of the game before you even submit your first offer, you can always calculate your own total closing costs by using Federal Title's brand new mobile app CloseIt! 

The app allows you to input different loan products, property locations, purchase prices and much more to produce a detailed picture of cash to close and what your proposed monthly mortgage payments would be. And best of all, the app is free!

Closing costs... explained: 3 tips for achieving best value

If homebuyers and refinancing homeowners want to achieve the very best value on closing costs, they should follow these three simple steps:

1. Shop mortgage terms

Since most mortgage lenders today all charge about the same in origination and ancillary charges (i.e., Processing Fees, Document Preparation Fees, Appraisal and Credit Report Costs, Tax Service Fees, Flood Certification Fees, etc.), it’s best to stay focused on the interest rate compared against loan term and payment of any discount points. For example, if you are in the hunt for a 30 year fixed rate without paying “Discount Points,” then compare the interest rate offered by several different lenders.

2. Shop title company settlement fees

While your real estate agent and/or mortgage lender may recommend or refer you to their preferred title company, the title company may not be providing you, the consumer, the best value since they are likely providing a financial benefit to the referral source (i.e., the real estate broker or mortgage company). This means that since the preferred title company is sharing some of its profits with the referral source, they are either charging you higher settlement fees or, at the very least, are unable to provide you lower settlement fees compared than customarily charged in the marketplace.

Thus, it is important that you shop for the best settlement fees among other locally established title companies. A simple Google search for will allow you to compare settlement fees among other local title companies. Be sure to make an apples-to-apples comparison since some title companies charge an all-inclusive flat fee while others itemize numerous charges such as: Settlement Fee, Title Search, Title Examination, Document Preparation/Processing, Notary Fees, Courier Fees, etc.

3. Shop title insurance rates

While nearly all jurisdictions regulate title insurance, which requires title insurance underwriters to file their respective rates, there is very little difference in title insurance premiums among various underwriters. However, while you are shopping for settlement fees with local title companies, check their title insurance rates and inquire as to whether you may be entitled to a “reissue rate” discount on the title insurance premiums to be paid at closing.

Typically, if your seller has owned the property for less than 10 years and possesses an owner’s title insurance policy, you should be entitled to either a partial or full reissue rate; depending on the amount of the existing coverage.

  • Ways to save at closing

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  • What are closing costs?

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  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.