THE BINDER
SALE WITH A BINDER TO INSURE ASALE
For as long as you own your home,your title insurance isvalid,but it does not insure a new mortgage created when you refinance.It also does not protect against events that may have transpired between the time you purchased your property and when it is refinanced.
The buyer of a property who anticipates reselling it within 2-3 years can save a significant amount intitle charges by purchasing a binder. A binder is a temporary contract of insurance in which the title company agrees to issue a specified policy within a certain period of time. The binder must berequested before the property being purchased closes escrow. The fee for a binder is 15% of the basic rate for a full title policy. This can result in a significant savings when the property is resold.
EXAMPLE:
$350,000 sales price Buyer plans to sell
within three (3)years for $450,000.00.
In this case the basic rate is $1,383.00. The binderfee is $207.35, or 15% of the basic rate. The buyersells the property three (3) years later for$450,000.00. The basic rate for a full title policy atthat price would be $1,614.00. The buyer now paysthe difference between the two basic rates, i.e.,$1,614.00 - $1,383.00 = $231.00.
WITH BINDER
$207.35 Initial Binder Fee
$231.00 Paid at Time of Resale
$438.35 Total binder fees
WITHOUT BINDER
$1,292.00 Short Term Rate
(i.e., Amount that would be paid for a short term policy rather than the standard basic rate of $1,614.00.)
TOTALSAVINGS
$1,292.00 Short Term Rate
$438.35 Total Binder Fees
$853.65 Total Savings
THREE (3) YEAR BINDER
3 YEAR BINDER----An additional year can be added to the binder. This is done by the buyer paying an additional 10% fee of the basic rate on the same sales price.
