When you buy a house, you already feel overwhelmed by how much money you’re parting with. But then, at the settlement table, what’s this? They’re asking you for even MORE money in title fees?
Junk title fees are our featured save more segment of this podcast, because if you dodge them you can save a bundle. My guest is Carolyn Warren, Author of the bestseller Mortgage Ripoffs and Money Savers and also Homebuyers Beware and a working mortgage broker herself. Welcome back to Easy Money, Carolyn.
Carolyn, first explain who a title agent is in the home-buying process and briefly what title insurance is.
Most home buyers don’t shop around for title services. Why should they?
Federal lending law states that the choice of title company belongs to the Buyer. However, when a listing agent places the home on the Multiple Listing Service, he/she includes the legal description of the property, and they get that from the title company. Thus, the listing agent chooses a title company right from the start.
No actual work has yet been done by that title company, so at this point, it is no problem to switch companies. There is no reason you can’t say, “I’d like to use Y Title,” even though the listing shows X Title. Truly, it’s no problem.
What are some examples of bogus title fees?
there shouldn’t be double-charges. Such as a messenger fee and an overnight fee. Both of those fees are to transport the signed docs back to the lender. Which are you using, a messenger or FedEx overnight? And why are you charging $75 when Fedex overnight by 10:30 am (2 lbs) is $28.05? 3 lbs is $31.40.
How can people find out what different title companies charge?
Use Google to search for your title company + zip code. Some companies have a fee calculator on their site you can use. For the others, call and ask. You don’t need a written quote. The title agent can provide the quote over the phone in just a few minutes.
Do you recommend people go with a Title company that charges one flat rate or one that itemizes the charges?
Some charge one flat fee. Others add a couple junk
fees. Some pile on a stack of fees that may add up to an extra $300 to $700. The ones who charge multiple fees say, “We like to break it down for the buyer, so you know where everything goes.”
That sounds fine, but when the total of the break-down is significantly more than the flat-fee company, something is fishy.
Sometimes a Title company agent performs your actual closing. Other times it’s an attorney or an escrow agent, depending where you live. Do those folks also sometimes add on junk fees?
* Archive or filing fee (You shouldn’t pay extra for their filing system. That is part of being in business.)
* Courier or messenger fee (Getting the signed documents back to the lender is part of what the closing agent’s large fee should cover. Moreover, FedEx and UPS, the services most agents use now, charges about $40 to overnight documents, so they shouldn’t show a padded fee of $60 – $100, as they often do.)
* Document preparation fee (Preparing the closing Settlement Statement and a handful of other boiler plate forms is what their main big fee covers. Adding this is redundant and borders on dishonest, in my opinion.)
* Email or edoc fee (They don’t need to charge you $50 to $150 to receive the documents from the lender by email. That is part of their normal job.)
Wire fee (While banks do charge a nominal fee to wire funds, none of the good settlement agents tack on this fee for their clients. They figure it is part of what their big fee covers.)
I always recommend that people ask for their final mortgage paperwork, including the FINAL title fees 24 to 48 hours in advance of their closing, so there are no last minute surprises and there’s time to fight last minute fees. Is that good advice?
It is now mandatory that the lender provide you with the Closing Disclosures (called the CD) three days before signing. The CD shows all the details of your loan, including a list of fees. If you see an error, you have those three days built in for it to be corrected.
To give people some motivation to shop around for title services and scrutinize these fees, how much money, in total, have you seen people charged in junk fees?
I once saw somebody charged nearly $800 in junk fees.