How Much Does Title Insurance Cost? Estimates, Requirements And Savings Tips

Buying a new home is an exciting venture, but there’s no doubt it can be intimidating to put such a large sum of money on the line. That’s why it’s crucial for you as a new home buyer to invest in safeguarding measures to keep you and your finances protected, even after closing. One way to do this is by purchasing title insurance.

Title insurance is a valuable policy that protects both the home buyer and lender from financial loss caused by title defects. Title insurance is well worth the small investment when it comes to protecting your finances.

Title insurance costs can vary state to state, but we’ll offer you our best estimates and tips when looking for your ideal title insurance policy and your dream home.

How Much Is Title Insurance?

The cost of lender’s title insurance varies by state, but typically ranges from about  0.1% – 2% of the home purchase price. Owner’s title insurance is separate and costs a few hundred dollars.

For example, let’s say your home’s purchase price is $300,000. If you take  0.1% – 2%  of the home’s price, the estimated title insurance fee will be in the range of $300 – $6,000.

What Does Title Insurance Cover?

After a property is sold, there’s still a possibility of someone challenging the property title. What your title insurance covers will depend on your title company. However, the issues below are typically covered under most title insurance policies:

• Encroachments
• Disputes pertaining to property ownership
• Liens resulting from incomplete contractor payments, unpaid homeowners association dues or other outstanding debts
• Forged or falsified documents and deeds
• Other fraud-related disputes

Why Is A Title Search Required With A Mortgage?

When applying for a mortgage loan, most lenders will require you to receive a title search before closing with your escrow company. A property title search includes examining public records of your property by a title company.

Some issues the title company look for include:

• False signatures or fraudulent claims made against the property
• Clerical errors in the courthouse documents
• Claims for unpaid property taxes
• Claims for workers who worked on the property but were never compensated
• Conflicts between former owners over wills

Most homeowners don’t ever need to use their title insurance, but it’s smart to have protection in the rare case any issues arise.

For example, let’s say you purchase a home that was part of a deceased person’s estate, but an unknown inheritor disputes that they own the home and it was illegally sold to you.

With a title search, your title company would have found documented proof of the inheritor before the transaction closed. If they failed to find proof, your title insurance would assist in covering costs to settle the dispute.

What Fees Are Included In Title Insurance Costs?

When you receive a title insurance quote, the included title company fees may be itemized rather than packaged together in one quote.

Title insurance quote fees may include:

• Title search fee
• Wire fee
• Notary fee
• Endorsement fees
• Transfer tax