May 19, 2022


How Much Does Title Insurance Cost?

How Much Does Title Insurance Cost?

Title insurance protects you and your lenders from any issues that could arise when you’re purchasing your home. 

For example, if you close on your property and learn the previous owner didn’t pay the contractor for their kitchen renovation, the contractor could put a lien on your home. Without title insurance, you’d be responsible for paying the contractor, now that you’re the owner of the home. 

As another example, if the property has an undisclosed heir who comes forward, you could risk losing your home entirely.

A title insurance policy solidifies your legal claim to ownership of your property. The title company you hire performs a title search to ensure that it’s “clean.” A clean title is a title that’s free of any liens, encroachments, easements, or ownership disputes of your property. If the title company missed anything, it’s still their responsibility to ensure you're protected.

While title insurance rates aren’t cheap, it’s only a one-time fee, and you usually can’t buy a home without one.

In this post, I will discuss:

  • How much title insurance costs
  • What’s included in title insurance policies
  • How to understand your title insurance quote
  • How to save money on title insurance

Let’s get started with this post.

How Much Does Title Insurance Cost?

On average, the total of a title insurance policy is about 0.5% to 1% of your home’s purchase price. 

The median price for a home in the U.S. was about $269,500 in 2021. If your home is the median price, title insurance likely costs you somewhere between $1,347.50 and $2,695. Your home’s location significantly impacts your title insurance policy premiums. The median home price for California in 2022 is $505,000, while the median home price for Mississippi is $119,000. 

When you refinance your home, your new lender’s title policy typically costs closer to 0.5%.

What’s Included In Title Insurance Costs?

Title Insurance Costs

What’s Included In Title Insurance Costs?

Depending on the laws of your state, your title company either itemizes their fees or bundles them into a single title cost quote. If your state does the latter, you can ask your escrow agent for an itemized list of the title fees. 

Here’s a list of the general fees included in your title’s purchase price, and what they are.

Title Search Fee

Your title search determines whether your title is clean (a.k.a. free of any claims, liens, etc.) or if it can be disputed.

Endorsement Fee

When a loan is purchased, the previous owner must sign an endorsement note, formally denoting the title transfer.

Deed Preparation Fee

Simply put, this is the cost for preparing the deed.

Insured Closing Letter

This is the letter that forms a contract between the lender and the title insurance underwriter. In this letter, the underwriters agree to compensate the lender for any actual losses caused by specific types of misconduct on the part of the closing agent. 

Additional fees may include:

  • Government recording charges
  • Overnight mail charges
  • Wire fees
  • Notary fees
  • Settlement fees
  • Transfer tax
  • Tax and other certificates
  • And more.

How To Understand Your Title Insurance Quote

In some cases, your title company may quote you a different amount than what’s listed on your loan estimate. This differential may look fishy, but it’s not. Some state laws require title companies to disclose their fees in a different way. In the end, the cost of your title insurance should be what’s disclosed on your loan estimate. 

According to the Consumer Financial Protection Bureau (CFPB), you should examine your loan estimate and end-title company fees. The two should match. If not, consult with your escrow agent.

How To Save Money On Title Insurance

There are a few ways to save money on title insurance premiums. Here’s how to do it.

Negotiate With The Seller

Typically, title insurance is one of the closing costs that the buyer pays for. However, if it’s a buyer’s market, you may talk to the seller about paying your title insurance costs. If the seller is in a hurry to close, paying a little extra to transfer the title usually isn’t a big deal.

Endorsement Fee

When a loan is purchased, the previous owner must sign an endorsement note, formally denoting the title transfer.

Do Away With Add-On Fees

Typically, title insurers can’t make significant rate adjustments. Because of this, you’ll probably have a hard time finding stark contracts in title policy premiums. However, you can negotiate the add-on fees.

Title policies usually have extraneous fees associated with the transaction, such as mailing fees, copying fees, courier charges, and admin fees. Contact your title insurance company and ask if they can remove some of these fees.

Shop Around

Your lender may suggest a title insurance company. However, you are not obligated to abide by their recommendation. Sometimes they’re recommending a title company because they’ve worked with them before. 

As with many major decisions, I recommend looking into several title companies to see which one can offer you the best deal for the price. It doesn’t take long, and you could save hundreds, even thousands, of dollars!

In addition to shopping around for title insurance companies, remember that you can also shop around when selecting a lender.

Bundle Your Title Insurance Policies

When you buy title insurance, you're actually purchasing two different policies: a lender’s title insurance policy and an owner’s title insurance policy. 

Your lender’s title insurance policy protects your lender from any title disputes that occur after your property is purchased. Lenders almost always require to purchase the lender's title insurance, so they can avoid loss if problems with the title arise. 

Your owner’s title insurance policy protects your rights as long as you or one of your heirs remain the property owner. When you purchase the title, you’re buying the property and all debts—known or unknown—associated with it. Owner’s title insurance protects you from the unknown.

You can usually bundle both of these policies to receive a discount on your title insurance. This is often referred to as the “simultaneous rate issue”.

Ask About Additional Discounts

In certain situations, lenders may offer you a discount on your closing costs. Ask your lender about any options available to you. For example, if you refinance your home after five years, you should ask your lender about loyalty discounts on closing costs. Some homeowners insurance companies will give you a discount on coverage for each year you don’t file a claim.

Final Thoughts

Title insurance usually costs between 0.5% - 1% of your home’s purchase price, and usually includes everything you need to ensure you’re protected in case of ownership disputes, liens, encroachments, or easements. 

Before purchasing title insurance, I recommend you do your research, shop around for policy options, and try to bundle lender’s and owner’s title insurance together. You can also negotiate with the seller, lender, and title insurance company when you can, as this could mean getting a better rate.

About the Author

As a native Washingtonian, Carlos Reyes’ journey in the real estate industry began more than 15 years ago when he started an online real estate company. Since then, he’s helped more than 700 individuals and families as a real estate broker achieve their real estate goals across Virginia, Maryland and Washington, DC.

Carlos now helps real estate agents grow their business by teaching business fundamentals, execution, and leadership.

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