A recent study, conducted by Dr. Susan Woodward, once again showed that consumers spend too much on closing costs. This study, titled A Study of Closing Costs for FHA Mortgages, analyzed 7,500 FHA mortgages that originated in May and June of 2001. Borrowers with similar or identical credit scores, loan terms, and mortgage amounts paid disparate amounts at the closing table. Even though there were some demographic differences that stood out even consumers who have similar demographic profiles were charged differently. In the end the report found one of the most important factors was that consumers simply do not understand closing costs and do what they are told by their mortgage broker, realtor, attorney, etc. It can be an overwhelming process and most consumers just want to get it done. Many do not realize that they could save a significant amount of money if they took a bit of time to learn about title insurance and closing costs by shopping around and doing a little bit of research online.

Just Another in a series of reports

While I believe this is another good study it is just reiterating what many of the title insurance bloggers and spokespeople have been saying for a while now. Closing costs are too high because consumers are being lead by their representatives in the real estate industry who may be receiving gifts or other compensation to refer their clients to a specific title insurance company. That company in turn passes on extra costs to the consumers to pay for those gifts. The consumer does not notice because he/she is overwhelmed by the whole process and relying on their representatives to look out for their best interest.

How do we fix it?

These studies do a great job of bringing more attention to the problem but IMO they are not reaching all of the right people, the consumer. Most of the people who are reading these reports are real estate or mortgage professionals. Consumers do not pay attention to reports like this until they need to buy or refinance. That means it is up to title companies and other real estate professionals to utilize these studies to make our service more consumer friendly. If we take the time to help consumers understand the whole process, let them know that the ultimate choice of a title insurance company is up to them, and charge them honestly we can help make the industry stronger and more well respected.

We are trying at myClosingSPACE

That is exactly what we have tried to do at myClosingSPACE.com. Our mission is to bring title insurance into the forefront and help consumers understand it so they can make their own decisions and save money on closing costs. Even if they do not use our service we want to make sure they are making their own choices while knowing all the facts. We will continue to push for consumer choice and attempt to provide useful information about title insurance to those consumers who are ready to buy their new home or refinance their current mortgage. There are other title companies who are doing the same thing and all of the information provided through blogs, studies such as this one, and other sources can help spread the message. Hopefully this will eventually lead to a change in the industry and put the consumer in charge. Change is difficult to achieve but with the flow of information inherent with the Internet we can continue to provide the information and hope that it reaches those who need it most, the person who is buying or refinancing their home.