By Jeff Lazerson | jlazerson@mortgagegrader.com | MortgageGrader.com | September 29, 2025

Article originally posted in Orange County Register on September 25, 2025

If you want to make your home purchase just a little more affordable, focus on the transaction costs.

You may not be able to do much about the home price because you and the seller must come to a mutual agreement. You cannot do anything about mortgage interest rate ranges.

But you can do something about escrow and title insurance fees, services that are required to complete a sale.

The Real Estate Settlement Procedures Act, a federal law enacted in 1974, protects homebuyers by giving them the right to shop for and choose the escrow agent and the title insurance company.

In practice, that’s not how it works.

First, let’s start with Southern California customs in the resale market. The buyer and the seller split the total escrow fee 50/50.

The seller pays for the owner’s title insurance policy or CLTA. The buyer pays for the lender’s title insurance policy or the ALTA.

New homebuilders can be a little trickier. The fine print in the very long contract may require the buyer to pay both halves of escrow, for example, or both title insurance policies – or all of the above.

It’s an unwritten rule among real estate professionals and certainly common industry practice for the home sellers’ listing agent to choose the settlement service providers — that is, the title insurance and the escrow companies.

The unstated threat from the listing agent goes like this: “If you are a troublemaker and don’t play ball with us on settlement services providers, we may move on to another buyer.”

Listing agents are motivated to choose these settlement providers for one of three reasons:

1) The favored escrow officer and title insurance company provide truly outstanding service and support

2) The real estate brokerage has an affiliated business relationship with an in-house escrow company and/or title company, which may tie brokerage commission splits to the amount of business the real estate agent sends to the in-house service provider. “You support our profit centers, and we can then afford to give you a higher commission split.”

3) Illegal kickbacks for directing business to that settlement provider, which can be in the form of payola (cold hard cash), paying for marketing materials like printing and postage or paying for something else of value, say a golf trip, for example.

Regarding the escrow company, there are a couple of ways to find the best pricing.

The first is to ask in the purchase offer for the listing agent’s escrow officer to price match the fee the buyer might find on his or her own. You are not asking for a different escrow company, rather just a price match.

The second is to ask the listing agent’s escrow officer for an estimated settlement statement early in the process. Shop three local escrow companies, getting a written settlement fee estimate from each. Go back to the escrow officer and ask him or her to please match the fees of the least expensive bid.

If the escrow officer refuses to price match, the buyer can demand the real estate agents replace the escrow company with the cheaper one the buyer found.

If the agents give the old line of, “Well, you agreed in writing to use the sellers’ services,” that’s not going to hold water because public policy supersedes the contract.

If they still won’t budge, let them know you will be filing a complaint with the Consumer Financial Protection Bureau or CFPB. The compensation differential is not worth the regulatory grief that might come their way.

And be sure to show the escrow officer a copy of this column.

Now, let’s turn our attention to title insurance companies.

Research by the Consumer Financial Protection Bureau indicates a buyer can save $500 on title insurance just by shopping around.

Title insurance is a little trickier to price match because the title insurance companies’ prices are regulated by the state of California’s insurance commissioner.

If the title insurance company cannot match pricing because it thinks its violating state law, then you will just have to insist on changing title companies. Remember, it’s the buyer’s choice, nobody else’s.

I wrote a similar column in 2014, “Don’t get snookered on title and escrow fees.” I’m writing about this again because I’ve received some consumer questions about high escrow fees. Escrow companies use a math formula to calculate the escrow fee. Higher home prices are commanding higher escrow fees. In one recent file, the escrow fee was more than $8,600. Yikes!

Over the years, several buyers called or emailed me, writing that these methods did, in fact, lead to savings for escrow and title insurance prices.

One thing you shouldn’t get lost on is complexity. I can tell you, some escrow and title insurance officers are smarter problem solvers than others when it comes to messy escrow or property title problems. In those cases, if you think the escrow or title officer you are dealing with has an excellent handle on the solve, I’d just stay with them and not price shop.

Next week: How home buyers can shop for realty agents and their buyer side commission charges. And, shopping Mortgage Loan Originators, their interest rates and fees.

Freddie Mac rate news: The 30-year fixed rate averaged 6.3%, up from 6.26% last week. The 15-year fixed rate averaged 5.49%, up from 5.41% last week.

The Mortgage Bankers Association reported a 0.6% mortgage application increase compared with one week ago.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $806,500 loan, last year’s payment was $92 less than this week’s payment of $3,993.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.375%, a 15-year conventional at 5.125%, a 30-year conventional at 5.875%, a 15-year high-balance conventional  at 5.625% ($806,501 to $1,209,750 in LA and OC and $806,501 to $1,077,550 in San Diego), a 30-year high-balance conventional at 6.125% and a jumbo 30-year fixed at 6.125%.

Eye-catcher loan program of the week: A 30-year mortgage, fixed for the first five years at 5.375%, with 30% down payment and 1 point cost.

Jeff Lazerson, president of Mortgage Grader can be reached at 949-322-8640 or jlazerson@mortgagegrader.com. His website is www.mortgagegrader.com.

If you enjoyed this article and want to receive weekly mortgage news for FREE, sign up for the newsletter HERE.