Title insurance for refinancing help

[brotatochip]

So I am in the process of refinancing to a 15 year mortgage and could really use some help on shopping for title insurance companies.  The property is in Pa so the title policy is a fixed rate but I am questioning the other add-ons.  I'm refinancing $145,900 and was estimated $1867 total by the Banks good faith estimate.  No surprise, the title company is owned and operated by said bank.  These services I can shop for and need some guidance.  Can anyone point me in the right direction on this please?  I know I can do better than $1867!

[forummm]

Is the title policy a fixed rate? Or can you do better? Those seem to be contradictory.

[brotatochip]

The title policy is fixed in Pa based on amount financed but there are $700 in additional fees associated with the title insurance package in the Good faith estimate. 

[forummm]

I'm not sure if it's a federal or state thing. It may depend on your state. At least in my case I could shop around.

[AlwaysLearningToSave]

Go through their estimates line-by-line and make sure you aren't paying for things you don't need.  You likely need the title company to serve as a closing agent, to do the title search, and to provide a lender's title insurance policy (and maybe some other things).  You probably don't need an owner's title insurance policy because you probably got an owner's title insurance policy when you purchased the home.  You may or may not need additional endorsements. 

[forummm]

It looks like RESPA allows you to select your own title insurer in all states.

You probably don't need an owner's title insurance policy because you probably got an owner's title insurance policy when you purchased the home. 

I believe I was told that the policies only good until another mortgage was acquired. Was that wrong information (or do I remember incorrectly)?

[AlwaysLearningToSave]

It looks like RESPA allows you to select your own title insurer in all states.

You probably don't need an owner's title insurance policy because you probably got an owner's title insurance policy when you purchased the home. 

I believe I was told that the policies only good until another mortgage was acquired. Was that wrong information (or do I remember incorrectly)?

Yes and no. 

A lender will always insist on a new lender's title insurance policy whenever the lender makes a new loan secured by real estate.  But the reason is not that the old title insurance policy is no longer in force-- the original policy remains in force.  The reason the lender requires a new policy is that time has passed and there are new title risks that the lender needs to insure against.  Thus, they will insist on a new insurance policy to cover the new risks. 

An owner's policy is similar in that it continues in force even if the property is subsequently refinanced.  Thus, if you purchased an owner's title insurance policy when you acquired the property, you are already insured in the event you did not receive good title to the property from the person who conveyed it to you.  You would not be insured against some title issues arising after the Policy Date, but there's not a lot of risk because you own the property.  If there is a title risk, its probably your fault anyway.  I suppose reasonable minds could differ on the need for an owner's title insurance policy upon refinancing but if I were to refinance, I would not purchase another owner's title insurance policy. 

The key difference between the risk for the owner and a lender in a refinancing situation is knowledge.  The lender is a stranger to the property and doesn't know if the owner has previously conveyed the property to a third party or previously granted a higher priority security interest to another lender-- thus there are real risks for the lender to insure against.  The owner presumably knows whether there have been any conveyances and doesn't have much risk to insure against. 

Here is a link to a sample ALTA homeowner's policy: http://www.landtitleco.net/downloads/ALTA_Homeowners_Policy_Sample.pdf

Check out the bottom of the 6th page starting at "2.  Continuation of Coverage" to see that the policy remains in effect. 

[AlwaysLearningToSave]

My two cents on title companies:  If you are working with a local or regional bank and the title company is a local title company, I wouldn't worry too much about the fact the title company is owned by the bank.  Sure, it seems a little close but they ought to do a good enough job at a reasonable enough price.  Doesn't hurt to shop around, though. 

If, however, you are working with a large lender and the title company doesn't seem to have any local presence, then I would look at using a local title company.  In my experience (in a different geographic area) the local title companies are staffed with people who are much more likely to actually know what they are doing whereas the large non-local title companies will be completely befuddled if anything slightly out of the ordinary arises.