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The Re-issue Rate: Savings on Title Insurance

You can save a lot by holding that property for less than a year.

Real estate investors, who usually flip properties for handsome profits, have a trick when it comes to saving on title insurance: asking a re-issue rate. Title transfers are usually insured by a title company from seller to buyer. The longer the property is held, the higher policy costs shall be paid. However, real estate investors only hold the property less than a year (depending on market conditions, of course) so the full cost of a title insurance won’t be practical – since there’s a very low risk that something might happen within twelve months.

As an alternative, they ask for a re-issue rate on the title insurance; when there’s another policy issued on the same property within the last few years. They can expect a discounted rate because only the claims that will arise from the time they possess the property will be covered by the re-issued policy. Any claim that occurs before that period will be covered by the previous owner’s insurance already.

But what if you’re not an investor? There’s nothing to worry about. If you’re refinancing, you can ask for a lower rate from the issuing company. Discounts can range between 30 and 40 percent. If you paid for a full title search and insurance policy in your pre-refinancing period, the new insurance will cover the date that you will begin refinancing.

Beware of scams though. Many insurance companies are deliberately misinforming homeowners about this cost-effective technique. They either hide the provision, or simply give a lower discount than what homeowners are actually eligible for. In some states, these companies are not legally required to disclose any re-issue rate information. Therefore, the best solution is to ask the issuing firm. Scrutinize the details of the re-issue rate. And if you’re ineligible, ask them to explain the reasons why.

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