By Tammy Engel
Mortgage Advisor
Choosing your escrow company
Mortgage Matters
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It’s less prevalent than it was before, but sometimes you still see listings where the seller has an established relationship with their own title and escrow company. Oftentimes this would be a bank or an investor who might do lots of deals so they like to use “their own team”. Usually these companies are outside of Kern County. Here’s why you should care.
Sellers aren’t allowed to force you to use their chosen companies, so there is always disclaimer language somewhere. It might say something along the lines of “buyer can choose their own escrow and title providers, but if they do the seller will not pay for the Owner’s Title Policy”. Oh no! The seller won’t pay a customary fee! But don’t be fooled. Let’s look at some actual files to quantify what it all means.
Title companies are required to file with the state insurance board for their title fees. Fees are based on a dollar amount and don’t change. In our area, the seller usually pays for the Owner’s Title Policy.
The fees that change so dramatically are the escrow bucket of fees. Once you leave Kern County, it amazes me what companies are charging for. Here’s an actual listing of fees charged recently on a file with an escrow company from Brea: settlement fee, loan tie-in fee, HECM closing fee, signing fee, web communication fee, draw deed fee,e-doc fee, messenger fee, title wire fee, endorsement fee, sub escrow fee, escrow wire fee. When I called to ask why we were being charged a “HECM fee” when the loan wasnot a HECM (reverse) mortgage, the escrow assistant told me she didn’t know why but we had to pay it.
These buyers used the seller’s chosenescrow companies, and the seller paid for the Owner’s Title Policy. For the $140,000 loan just described, buyer fees added to over $2200. At another escrow company in Palmdale, the fees for our $180,000 loan were over $1000. At an escrow company in Valencia, buyer fees for a $108,000 loan were $1885.
Just so you understand how remarkable this is, here is what those same fees might have cost using one of our local escrow companies, EVEN IF the buyer had to pay for the Owner’s Title Policy because we didn’t use the sellers company of choice: For the $140k loan, total charges around $1670 (savings $530) … For the $180k loan, total charges around $1787 (savings $787) … For the $108k loan, total charges around $1474 (savings $411).
Here’s the point: Don’t be bullied by a seller who tries to scare you into using their preferred settlement agents. Our local escrow companies are well known for their service and professionalism, and chances are excellent that you’ll save a bundle in closing fees by keeping your business at home.
Tammy Engel is your local Mortgage Advisor and has been working for your best interest since 1990. Contact her at 661/822-7325 for help with purchase, refinance, and reverse mortgage.
