When you apply for a mortgage, your lender probably tells you the title company that they use. This is standard practice. Most borrowers don’t want to be bothered with finding a title company. But what about the borrowers that do care and want to find their own title company? Do lenders allow this?
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FINDING THE RIGHT TITLE COMPANY
Yes, many lenders do let you shop for a title company, if that’s what you want to do. While most lenders do have a title company that they work with on a daily basis, they probably won’t turn your business away just because you want to use a different title company.
If you want to find your own title company or already have one that you want to use, just let your lender know upfront. This way they can tell you their policy regarding using other title companies. Some lenders are fine with it, while others aren’t willing to use anyone but the title company they work with on a daily basis.
WHY SHOULD YOU SHOP FOR A TITLE COMPANY?
You might wonder why you would even want to shop for a title company. Isn’t shopping for a lender and a home enough? The title company does have a major effect on your loan, though. Because you’ll need title insurance to close on your loan, you’ll want to find the title company that offers the most competitive rates.
In addition to insurance, the title company handles your closing. This, of course, costs money and each title company has their own costs. If you know of a title company that charges less for the closing and will be more affordable for you, it can work to your benefit.
When you choose your own title company, you may even have the option of choosing the services you do and don’t want. When you use the lender’s chosen title company, you rarely have contact with the title company and you just ‘go with the flow.’ Many people end up paying for services they didn’t need and some don’t even know that they paid for those services.
Having your own title agent also puts you in the driver’s seat. You can ask the agent questions, negotiate fees, and see where you can save money. You can also have more direct contact with the title agent, whereas if you use the lender’s agent, the lender will usually have all of the contact.
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DO YOU NEED TITLE INSURANCE?
Unfortunately, one thing you cannot negotiate is the presence of title insurance. There are two types that you can buy, though; one is required and the other isn’t.
The required title insurance is the lender’s policy. This protects the lender’s interest in your property should someone try to stake claim on the property that didn’t show up during the title search. The lender’s policy is good for the term of the loan. If you refinance, though, you’ll have to pay for another lender’s policy for the new lender.
You can also purchase an owner’s policy. This insurance policy covers you, the owner, should someone try to stake a claim in the property or come at you with any other claim on the property. Owner’s insurance isn’t required, but it’s highly recommended. You only pay the premium one time and it’s good for as long as you own the home.
WHAT ABOUT THE CLOSING
The other big role that the title company plays in your mortgage is as the closing agent. This is the person that sits down and goes over the mortgage documents with you. It’s important that you choose a title agent that you have a good relationship with and that you can trust. Your lender will likely try to encourage you to use their title agent because they know their quality of work and what they provide. If you are determined to find your own closing agent, though, it should be your option when getting a mortgage.
While it’s not common, you may be able to shop for a title company if you decide it’s necessary. Talk with your lender about your chances of doing this before you start, though. If your lender won’t allow it, at the very least, you can ask your lender if you can cherry pick the services that the title company provides so that you can minimize the costs the title company charges.