Buying a Home in Michigan
E. Selecting A Settlement Agent
Settlement practices vary from locality to locality, and even within the same
county or city. Settlements may be conducted by lenders, title insurance
companies, escrow companies, real estate brokers or attorneys for the buyer or
seller. You may save money by shopping for the settlement agent.
In some parts of the country (particularly western states), settlement may be
conducted by an escrow agent. The parties sign an escrow agreement which
requires them to provide certain documents and funds to the agent. Unlike other
types of settlement, the parties do not meet around a table to sign documents.
Ask how your settlement will be handled.
F. Securing Title Services
Title insurance is usually required by the lender to protect the lender
against loss resulting from claims by others against your new home. In some
states, attorneys offer title insurance as part of their services in examining
title and providing a title opinion. The attorney's fee may include the title
insurance premium. In other states, a title insurance company or title agent
directly provides the title insurance.
Owner’s Policy
A lender’s title insurance policy does not protect
you. Similarly, the prior owner’s policy does not protect you. If you want
to protect yourself from claims by others against your new home, you will need
an owner's policy. When a claim does occur, it can be financially devastating to
an owner who is uninsured. If you buy an owner's policy, it is usually much less
expensive if you buy it at the same time and with the same insurer as the
lender's policy.
Choice of Title Insurer
Under RESPA, the seller may not require you,
as a condition of the sale, to purchase title insurance from any particular
title company. Generally, your lender will require title insurance from a
company that is acceptable to it. In most cases you can shop for and choose a
company that meets the lender’s standards.
Review Initial Title Report
In many areas, a few days or weeks before
the settlement or closing of the escrow, the title insurance company will issue
a “Commitment to insure” or preliminary report or “binder” containing a summary
of any defects in title which have been identified by the title search, as well
as any exceptions from the title insurance policy’s coverage. The commitment is
usually sent to the lender for use until the title insurance policy is issued at
or after the settlement. You can arrange to have a copy sent to you (or to your
attorney) so that you can object if there are matters affecting the title which
you did not agree to accept when you signed the agreement of sale.
Coverage & Cost Savings
To save money on title insurance, compare
rates among various title insurance companies. Ask what services and limitations
on coverage are provided under each policy so that you can decide whether
coverage purchased at a higher rate may be better for your needs. However, in
many states, title insurance premium rates are established by the state and may
not be negotiable. If you are buying a home which has changed hands within the
last several years, ask your title company about a "reissue rate," which would
be cheaper. If you are buying a newly constructed home, make certain your title
insurance covers claims by contractors. These claims are known as “mechanics’
liens” in some parts of the country.
Survey
Lenders or title insurance companies often require a survey to
mark the boundaries of the property. A survey is a drawing of the property
showing the perimeter boundaries and marking the location of the house and other
improvements. You may be able to avoid the cost of a complete survey if you can
locate the person who previously surveyed the property and request an update.
Check with your lender or title insurance company on whether an updated survey
is acceptable. | 
