Title insurance protects mortgage lenders and homebuyers against certain problems or defects with a title during and following a transfer of property ownership. If there is a title dispute during the sale of real estate, the insurance company will generally pay for legal damages covered by the insurance policy. Title insurance premiums can range from several hundred to several thousand, depending on various factors like the value of the home and the amount of the loan. The average title insurance policy has a one-time premium which covers all the upfront work, as well as ongoing loss and legal coverage. In this post, learn about the different types of title insurance and find out the answer to the question, ‘how much does title insurance cost?’
Types of Title Insurance
There are two main types of title insurance: lender’s insurance and owner’s insurance. When buying a home, your lender requires that you have a title insurance policy to secure the mortgage. A lender’s policy helps protect the bank or lending institution in the event that a title problem occurs. Lender’s policies are used as a way for lenders to insure their security interest on a property. A lender’s insurance policy remains in effect for as long as the bank maintains an interest in the real estate, usually until the mortgage is paid off. You will need to purchase a new policy if you refinance the loan.
Homeowners may or may not be required to purchase an owner’s title insurance policy depending on their location and the terms of their loan. An owner’s policy helps protect a homeowners right for as long as the homeowner or his or her heirs own the property. While an owner’s policy is typically the responsibility of the buyer, in some instances the home seller will purchase the policy for the buyer. Both types of title insurance pay legal fees and valid claims to defend against losses resulting from title issues. These policies also help reduce ownership risks by prompting a thorough title search.
Cost of Title Insurance
There are a number of factors that can influence title insurance cost. Unlike most other types of insurance, title insurance requires just a one-time payment that is typically due on or before the closing date of the transaction. In some instances, your lender may be willing to split the one-time payment into more manageable monthly installments, however, this is not the norm. It is also important to remember that while a lender’s policy is required by most lenders, an owner’s policy is not required by law. However, it can be a highly valuable policy to have if you are buying real estate.
The cost of title insurance is generally separated into two main categories: premiums and service fees. When determining a premium for your policy, the value of the real estate is taken into consideration. There are also other factors that come into play, such as the amount of work that is needed to maintain up-to-date and accurate information on the covered property. Your insurance provider will also consider the amount of work that is necessary to perform a thorough title search on your property.
Premiums for title insurance are also based on other important variables, like the amount of legwork needed to remedy any title defects, as well as the expected expenses of compensating the insured party if a title defect is found. Across the U.S., the average title insurance policy has a one-time premium payment of approximately $1,000. However, this amount can decrease or increase based on the factors previously mentioned. The cost of your title insurance can also vary widely depending on your location. Many jurisdictions tightly regulate premiums and place limits on how much insurance providers can charge.
Saving on Title Insurance
If you are looking to save on title insurance, you are in luck. There are a number of ways to acquire a great title insurance policy without breaking the bank. If premiums are unregulated in your state, you are free to shop around to find the best deals. However, do not sacrifice quality to save a few bucks. Many companies will also provide you with a discount if you bundle your title insurance with other owner’s policies. When purchasing a home, there is also room for negotiations. Do not hesitate to negotiate with the seller to see if he or she would be willing to cover the cost to close the deal faster.
Learn More About Title Insurance
Many new homeowners overlook the importance of title insurance until they are in a situation where an insurance policy could really come in handy. Title insurance is one of the best ways to protect you and your lender in the event of a title defect or other problem. To learn more about title insurance or to get the answer to the common question “How much does title insurance cost?” for a property you are buying, speak to the professionals at Mathis Title Company today.