Benefit of Using Own Title Company vs. Seller's Title Company (Fannie Mae, HUD, Etc)

[Greg P.]

Hello as a Rehabber I'm always trying to save costs when able. I've noticed when I'm purchasing houses from Fannie Mae or other banks they offer $250 closing fee + title insurance (no charge). My title company is charging $695 closing fee + 200 for title insurance. That's around a $700 difference and it adds up. I've heard of people saying there is a benefit using a "local" title company and would rather pay extra for the local services. So far, I haven't see any benefit in using a local title company and the $700 difference is a no brainer. Could any other rehabbers chime in and let me know if you use your own title company for fannie mae or hud deals or if you use theirs? Thanks!

[J Scott]

I like the idea of using my own closing attorney for one reason -- the bank's closing attorney will drag their feet (they likely have hundreds of REO closings and yours isn't special), but my closing attorney will push to get things done as quickly as possible. In my experience, if my closing attorney is pushing for a quick close, the seller's attorney will comply (the seller will still use their own attorney for their side of the closing).

So, by using your own attorney, things will generally go more quickly, and in my experience, MUCH more quickly.

That said, it will cost a bit more because seller isn't paying title insurance for you. But, that's only about $150-300 for sub-$300K houses. If your closing attorney is charging significantly more in attorney/closing fees, then you need to either negotiate them down (let them know the other attorney is charging $450 less) or find a cheaper closing attorney.

Personally, my closing attorney only charges $200 when I buy properties, which is cheaper than most of the REO attorneys. They do this to help me out, and in return, I happily use them for all my sales and pay full price. It's a win/win...