When you are buying a home, title insurance may not be the best in your mind, but it is one of the most important things to protect your investment. Title insurance is a one-time cost and usually ranges from $500 to $3,500 per insurance policy, protecting both buyers and lenders from costly legal disputes tied to property ownership history.
From undiscovered liens to record errors and ownership disputes, Title Insurance offers lasting peace of mind. This Redfin article breaks down the title insurance costs, what’s covered, and important FAQs.
In this article:
What is Title Insurance?
Title insurance is a type of coverage that protects you from potential issues with property ownership history that can affect your home’s legal rights. These issues (often referred to as “title flaws”) include unpaid property taxes, liens, property disputes, errors in public records, or even fraud.
Unlike other forms of insurance that protect you from future risks, title insurance protects you from issues that may have occurred in the past but not discovered during title searches.
There are two types.
Lender’s Title Insurance (needed by mortgage lenders to protect profits on the property until the loan is repaid)
How much does Title Insurance cost?
On average, title insurance costs between $500 and $3,500. For most home buyers, this can range from about 0.5% to 1% of the home purchase price.
For example, if you are buying a $400,000 home, title insurance can cost between $2,000 and $4,000.
Factors that affect cost:
Home Purchase Price Your State or Local Regulation Loan Amount (Lender’s Coverage)
Who will set the price?
Some states regulate title insurance rates. This means that all businesses must charge the same amount based on their public fee schedule (such as Texas, Florida, New Mexico, Pennsylvania). In other states, prices are more flexible and may vary between providers.
How much does Title Insurance cost?
Insurance itself is not the only premiums paid for title insurance. Typically, these are bundled into costs:
1. Title search and exam
A comprehensive investigation of public records to ensure that the seller has clear ownership and legal authority to sell. This includes checks.
Property Deed Court Record Tax Probate and Divorce Procedure Lien or Debt
2. Clearing the title problem
If problems are discovered during a title search (such as unpaid debts or claims), the title company will work to resolve them before closing.
3. Insurance contract
Once the title is cleared, a policy will be issued. If a target issue occurs after the closure, the title insurance company will:
Pay monetary damages up to policy restrictions covering legal defense costs
Who pays for title insurance?
Lender’s Title Insurance: Usually paid by the buyer’s owner’s Title Insurance: depends on the local customs
The owner’s liability to pay the title premium depends on the location and negotiation. In some states, buyers pay the owner’s policy. In others, it is customary for the seller to cover it. It is also common for buyers and sellers to split costs.
For example, if you sell a house in Los Angeles and buy it in Virginia Beach, the expectations of those who pay may be completely different. Therefore, it is important to understand what is typical for each market. Real estate agents can clarify what the market standard is.
Is Title Insurance worth the cost?
Owner’s policy is optional, but skipping it can be a costly move. Even homes with clean records can have hidden issues, such as old liens and property disputes, months or years after closing. If that happens, you could face an expensive legal battle without reporting.
Without a policy, you are either liable for attorneys’ fees, court fees, or even risk losing your property. So, you may be tempted to abandon your owner’s title insurance to save money when closing, but take the time to consider whether short-term savings are worth the risks of the future.
FAQ: Title Insurance Costs and Fees
Is there a recurring fee?
no. Title Insurance is a one-time premium paid when closed. As long as you or your heir owns the property, it covers you. There are no ongoing payments, renewals or deductions.
Can I shop for title insurance?
Yes – and you should. Many buyers don’t realize they have the right to choose their title insurance company, even if the lender recommends it. Overflowing shopping can lead to better pricing and bundle discounts.
How can I save money on Title Insurance?
Shopping: You can choose your own title company, even if your lender recommends it. Find a reissue rate: If the seller recently purchased title insurance, you may be eligible for a discounted premium. Bundle Policy: Buying both lender and owner policies from the same provider may reduce overall costs.
Do I still need title insurance even if I’m buying a new construction home?
Yes, if you are funding a new construction home, you will need to purchase a lender’s title insurance. The owner’s title insurance should also be strongly considered. Even new constructions can have title issues, such as land deed issues, unpaid contractors, or previous ownership disputes.
How long will Title Insurance coverage last?
Owner’s policy will continue as long as you or your heir owns the property. The lender’s policy remains in effect until the mortgage is repaid.
Can I buy title insurance after closing?
Technically, yes – you can purchase owner title insurance after closing, but usually not recommended. For best protection and price, we highly recommend purchasing owner title insurance at the time of closing. That way you’ve been covered from day one and avoid the protection gap.
Is Title Insurance included in the closing costs?
Yes, title insurance is usually included in closing costs. Both lender and owner policies are usually itemized in closing disclosure (CD) or settlement statements, allowing you to see exactly how much payments are made and who is responsible for each expense.
