Make Title Insurance Your Competitive Advantage
In the current refinance market, so many consumers view mortgages as a commodity—and have the incorrect attitude that all mortgage servicers are the same. With borrowers' eyes glued to the rate calculator, finding a way to differentiate yourself as a servicer has become ever more difficult.
The price of the mortgage itself is often the key factor in customers' decision-making process. But now, closing costs (especially title insurance) have become a key differentiating factor.
As property owners scramble to refinance before higher interest rates take hold, servicers are hyper-aware of the importance of preserving market share not only by retaining their current borrowers but also by attracting new customers. Given that interest rates fluctuate, it may not be possible to stand out to these consumers through lower rates alone. Mortgage professionals must therefore think outside the rate box when it comes to putting together a compelling package for prospective refinancers.
This is where title insurance can become your secret weapon. By reducing the cost of title insurance for your borrowers, you can put money in their pocket—without dipping into your own revenue.
For borrowers, title insurance can easily become the highest single cost of refinancing. Jumping on lower rates makes a welcome impact on monthly payments in the medium and long term, but, in the immediate term, consumers can balk at the thousands of dollars in closing costs listed on the GFE, with title insurance often the biggest ticket item.
On a $350,000 loan in the state of Florida, a typical lender's policy alone can run to $1,825. The premium on a $750,000 loan may approach $4,000. As these costs come directly out of the borrower's wallet at the closing table, being seen as helping to reduce the price by hundreds or even thousands of dollars can become an extremely attractive selling point for servicers.
Fortunately, there has been recent innovation in the title insurance market, and there are real options for consumers. There is now price competition among providers in almost every state, as well as lower-cost providers who are financially strong and can consistently offer a high level of customer service. By partnering with companies like these, you can stand out from other lenders by reducing costs for borrowers.
When a prospective customer contacts you about refinancing, servicers can move the conversation beyond a simple talk about rates and can engage consumers with information and education. Many borrowers may not even know the extent of the fees associated with refinancing, and, among those who do, most are likely not aware that title insurance is something they can shop for—and find at a lower cost.
As a servicer, you can connect with consumers using these talking points:
1. "We can offer you these interest rates, but let me tell you about other costs that are associated with refinancing—costs that you should ask about when speaking with any lender. Title insurance alone, which every lender will require, can cost several hundred or several thousand dollars, depending on the size of your loan."
2. "Since we partner with the industry's most efficient providers, we can help you reduce your closing costs and achieve significant savings of hundreds or even thousands of dollars."
3. "These savings will help you recoup the cost of refinancing much faster, and make refinancing a much more attractive option for you at this time so that you can truly take advantage of today's lower interest rates."
Being seen as an ally who can save customers money, rather than as a faceless entity to which they mail their monthly mortgage payments, provides the opportunity for deeper customer engagement—and a stronger likelihood that the customer will choose you for their refinance.
Ultimately, finding a lower-cost provider to partner with for your customers' title insurance needs will be a critical component of maintaining competitiveness.
Companies such as Closing.com, which offers a comprehensive list of providers, and Demotech, whose financial stability ratings on underwriters are considered a leading indicator of financial soundness, are terrific sources for identifying which providers offer the best options as far as price and reliability.
So as your company seeks to differentiate itself, take advantage of the innovation and progress in the title insurance market—and leverage it to grow your refi business.
Timothy Dwyer is CEO of Entitle Direct Group Inc., Stamford, Conn.