There are three major categories of fees associated with a mortgage refinance transaction:
- Lender Fees
- Title Insurance and Settlement Fee
- Government Charges
This article will help you understand Title Insurance and other related fees as they apply in the state of Pennsylvania.
The majority of title insurance charges in Pennsylvania are “filed” or approved by the Pennsylvania Insurance Department. These are broken down in four areas:
- Title Insurance Premium
- Endorsements to the Title Insurance Policy
- Settlement Related Fees
- Other Fees
Title Insurance Premium
Sometimes referred to as the “title insurance rate,” in Pennsylvania the premium in a mortgage refinance transaction can fall into one of four distinct filed rate structures. The rate is determined by the type of transaction, the amount of insurance required, and the number of years since the last evidence of title insurance (Typically a Deed for value or mortgage filed by an institutional lender).
Mortgage refinance loans are eligible for the Basic rate or one of three discounted rates. The policy amount is equal to the loan amount. See the table below for a quick summary of rate qualifications. Negatively amortizing and reverse mortgage loans may be subject to increased policy limits as required by the mortgage lender.
Title insurance rate calculators are available to help you determine the appropriate rate for your refinance transaction.
Endorsements to the Title Insurance Policy and Closing Service Letter
Since your lender is requiring title insurance, it also may require additional title insurance coverage provided through endorsements to the policy. The rate for most Endorsements in Pennsylvania is $50 per Endorsement.
Most lenders also require a Closing Service Letter that provides additional protections to the lender. The filed rate for a Closing Service Letter is $75.
Settlement Related Fees
These items are “lightly” regulated or not regulated at all. You should pay careful attention to this category and insist on full disclosure of all charges when requesting a quote.
Settlement related charges include notary, overnight mail, tax and utility certifications, and possibly a fee for conducting settlement.
Notary fees should be charged on a per act basis. They are set by the Commonwealth of Pennsylvania.
Pennsylvania Title Agents are to be reimbursed only for their expenses – courier costs, certifications, and other out of pocket expenses. They are not permitted to mark up these items.
A settlement fee is allowable only in specific circumstances. There is no upper limit set by the state. In many cases this charge is not necessary to conduct your closing and only serves to add to the profit of the title agent. You should request it be waived, or negotiate a substantial discount. One way to avoid this charge is to schedule your settlement at the title agent’s office during business hours. Under those circumstances, the settlement fee is absolutely not allowed.
Occasionally other legitimate charges are required for your closing and allowable by the Insurance Department. You should pay attention to any additional items not described above. Often these are unnecessary or “junk fees” like release tracking. You should shop for title insurance agents who promise no junk fees.
Your best bet is to compare the rates by requesting written title insurance quotes from at least two different title agents recommended by different sources. This should allow you to verify that you are receiving the best possible rates for your refinance transaction.