Buying a new house but unsure of how to protect your investment? Title insurance will help you. But how much does it cost? Keep reading to find out.
What is Title Insurance?
Title insurance safeguards the homeowner and the lender in cases of issues with the house’s title, including:
- Liens or lawsuits
- Undisclosed heirs
- Errors in deeds
What are the Title Insurance Costs?
Title policies are about 0.5% to 1.0% of the home’s purchase price. You will get either a cumulative quote or a breakdown of the policy, depending on which part of the country you live in.
A typical title insurance policy quote will include the following title fees:
Title Search Fee:
A title search verifies that the seller is the actual owner of the property the buyer intends to purchase. It also evaluates the house’s title, checking to see that it has no debts, liens or lawsuits, undisclosed heirs, etc. This is necessary to protect the buyer from monetary or ownership disputes associated with the title.
The cost of a title search ranges from $100 to $250 for a single-family home.
Title Settlement Fee:
The title company that functions as a settlement agent is paid the title settlement fee. It includes the administrative closing costs and is separate from the property value.
The title settlement fee is paid by the new buyer or split between the seller and buyer.
Lender’s Title Insurance:
A lender’s title insurance safeguards the mortgage lender financing your transaction. It is equal to the loan amount given to the buyer.
When purchasing a house using a loan, you will need a lender’s title policy.
Owner’s Title Insurance:
An owner’s title insurance policy protects the buyer’s transaction from title-related issues. Buying a homeowner’s title policy isn’t mandatory, buy it is highly recommended.
It has a one-time fee, and it protects you as long as you or your heirs own the property.
Certain states require a real estate attorney at closing. They review contracts and other paperwork, including the title. Real estate attorneys typically charge an hourly fee from $150 to $400.
Abstract and Recording Fee:
The abstract is a legal document for buyers that helps ensure a clear title. The seller typically pays the abstract fee, which can be $400.
Recording is the registration of the transfer of ownership of a house in the public record. It also lists liens or mortgages against the home.
The county charges the recording fee, $125 on average.
Average Cost of Title Insurance by State and City
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