How To Not Get Overcharged at Closing as a Buyer
In Pennsylvania, closings involving a bank loan must be closed by a title insurance agent. Title insurance protects the lender and buyer from title defects, fraud, and mistakes made by the title searcher. The buyer is free to pick whichever title insurance agent or title company they like.
The amount you pay, called the premium, depends on the purchase price. Most title insurance companies in Pennsylvania are members of the Title Insurance Rating Bureau of Pennsylvania (TIRBOP), which is a non-profit organization licensed by the Pennsylvania Department of Insurance. All TIRBOP members must charge the same title insurance rates, so no matter whether you go to a Fidelity National agent or a First America Agent (both TIRBOP members), you must be charged the same title insurance premium. You could save money by going to a non-TIRBOP insurance company, but those companies generally are considered not as reputable. There is a rate calculator on this website that will tell you the standard rate for an owner's policy: http://alphaadv.net/patitle/ratecalc.html
However – and this is where you can save some money – there are significant variations in the other types of fees that closing companies charge. I will go through various types of fees and try to explain when they are appropriate:
Owner’s Title Insurance – there are two basic types of policies, owner’s polices and lender’s policies. The lender’s policy protects the lender. It does not protect the owner. The owner’s insurance is optional, and you could save money by not getting it. However, I do not recommend this. If it is important enough for the lender to have, you should have it also.
Travel Fee -- The location where the closing will actually take place can save you money. If you want to close outside of the title agent’s office, you will likely be charged a travel fee, sometimes as high as $200. In my experience every title agency has this option.
Settlement Fee / Closing Fee – I have seen this occasionally. In Pennsylvania, the title insurance premium is supposed to be an all-inclusive fee, meaning there should be no separate “closing fee.” So, a separate closing fee or settlement fee to the buyer is always inappropriate. This fee could be around $150. This should be removed.
Document Prep Fee – Unless you need a special document to be prepared, this kind of fee is questionable. I would ask what this is and probably have it removed. Again, the title insurance premium is supposed to be an all-inclusive fee.
Wire in / Wire out fees – This fee is OK as long as it is a reimbursement to the closing company for the fees that they will incur as a result of being required to received funds via a wire or send funds via wire. Often the fees for receiving and sending wires are different.
“E-Document Fee” – This is a fee for printing loan documents that were e-mailed to the closing company by the lender. This fee is questionable and I would try to have it removed. Sometimes this is as high as $150.
Notary Fee – This fee is legitimate. Numerous document at closing require a signature to be notarized. Usually this is around $30 per closing.
Fees for Sending Documents to the Recorder’s Office – The delivery of documents, such as a deed and mortgage, to the county recording office are included in the title insurance premium. The only way a fee for this would be appropriate would be if the lender required them to be sent by a method other than first class U.S. mail, which is generally not the case.
Of course, using the right settlement company and making sure that the settlement statement is accurate is one of the best ways to save money at closing. Tkacik Law Office performs real estate closings as an Approved Attorney and does not charge the excessive fees that some closing companies charge.
David M. Tkacik, Esq. can be reached at 412-414-9644 and at DTkacik@TkacikLawOffice.com regarding real estate closings.