Title & Escrow Fees
Title & Escrow Fees
Include both the owner's and the lender's policy of title insurance as well as the escrow fee. Title insurance protects both the buyer and lender by insuring a clear chain of title, that the persons with the legal right to convey title to your property are the ones who have actually done so. Also, some polices protect against the occurrence of fraud and forgery.
The escrow fee is a service fee charged by the title company for acting as an independent third party in facilitating your transaction and insuring that all parties to the transaction perform as contractually agreed to.
Other title fees include the fee to notarize your loan documents (the notary fee) the fee required to record your deed of trust with the county recorder's office (the recording fee), as well as miscellaneous drawing, courier and express mail fees.
You may call the title company handling your purchase, provide them with the purchase price and loan amount you're requesting and they can supply you with an accurate fee quote based on the specifics of your transaction.
Your total fees for both title and escrow will be disclosed on your HUD-1 statement.
Title and escrow fees come into play when the seller accepts a buyer's offer and both the parties "open escrow" with a title or escrow company or attorney.
An escrow account holder is a neutral third party which holds onto, then exchanges, disburses and transfers deeds, documents and monies. Disbursements pay off existing loans and the agent records deeds, prorates property tax payments and interest and helps with the transaction's other transfer details.
Most of the money associated with a home purchase is channeled through the escrow account including a buyer's deposit, fees for the escrow account itself and related services, title insurance and title search fees, the mortgage money and associated fees, the real estate agent's commission, recording fees, filing fees, transfer fees, notary fees, courier fees and a host of others.
All these costs become "settlement costs" recorded on the U.S. Department of Housing and Urban Development's HUD-1 "Settlement Statement" or a reasonable facsimile, which discloses all of a housing transaction's costs for both the buyer and the seller.
For Borrowers: Usually taxes and insurance effect the final numbers on a HUD-1 more than any other one item. Taxes are given in the title report which is furnished by the title company you are using. Insurance premiums can change based on the amount of coverage requested by the lender. From time to time the estimates used on a Good Faith Estimate will be significantly wrong until the Loan Officer gets both the title and the insurance binder in thier hands and then they have final numbers for the closing.
Borrower's have a right to shop around and select the escrow and title insurance providers. Borrower's seldom do this however so in most cases the real estate agents or the loan officers select these service providers. The realty agent and loan officer will usually prefer to work with an escrow company that they are familiar with for a smoother transaction.
Most title and escrow companies charge the same fees. Some states require them to submit what their fees are to the Division of Insurance and they can not deviate from that set fee unless it is less.
These fees is not marked up by your mortgage broker and your mortgage broker is not allowed by law to make a profit off of these 3rd party fees.
» DISCLAIMER: The information contained in this article on 'Title & Escrow Fees' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.