What is the cost of title insurance?
You can save on the cost of title insurance! In the DC metro area traditionally it is the home buyer who pays for title insurance and title services.
Because the person who pays for the policy selects the title insurance company, it is the home buyer’s right to shop for and choose the title company and closing agent that will process closing.
Title insurance underwriters are required by law to file their rates with the states where they insure title. Therefore, title companies who are agents of the same underwriter will charge the same title insurance premium. (Title insurance premiums are a different charge from title service fees, which we’ll cover in just a moment.)
There are several title insurance underwriters all over the country that insure title, and they don’t all file the same rates. Sometimes title companies become agents of multiple underwriters, using one title insurance underwriter for one jurisdiction while using a second underwriter for policies in another, etc.
However, state insurance commissioners require title insurance underwriters to file their rates every year, and then title companies are bound by the same rates because the title company acts as an agent of the underwriter. It pays to ask your title company the cost of title insurance that they sell.
What kinds of title insurance are available?
If you’re taking out a loan to purchase your home, the mortgage lender will require you to purchase what’s called a lender’s title insurance policy, also known as a loan title insurance policy, because it protects the lender for the full amount of the home loan.
A second kind of title insurance policy, known as the owner’s title insurance policy, is optional. Owner’s title insurance protects the home buyer for the full amount of the property’s value. Most real estate professionals advise in favor of purchasing owner’s title insurance protection. Once you have decided to buy title insurance to protect your owner interest, you still have two choices of owner’s title insurance policies. Fortunately, you can wait all the way up until the day of closing to make your final decision between the standard policy and the enhanced policy.
The Standard policy is sufficient for the majority of cases. It covers issues that should have been identified and resolved prior to closing. For an additional 20% an Enhanced policy is also available. It includes the same coverage as the Standard policy as well as a number of post-closing issues and will cover increases in the value of your home, up to certain limits.
An Enhanced owner’s title insurance policy is not always necessary, so talk to your title attorney or closing agent to help you decide the appropriate level of coverage for your real estate purchase
How can you save on the cost of title insurance?
In most instances, you can save on the cost of title insurance! The first thing to ask your title company about is a “reissue rate” discount. This discount is dependent upon the title insurance underwriter as well as the property’s location, but it can lower the cost of your policy premium by up to 40%. Ask your buyer agent to request a copy of the seller’s title insurance from the listing agent. When you provide that to the title company, they will be probably be able provide you with a reissue rate!
Secondly, when purchasing the lender’s and owner’s title insurance policies together, you should receive a “simultaneous issue” rate. Many home buyers don’t realize they’re receiving this special rate and are surprised to see how expensive a lender’s title insurance policy becomes when they opt out of purchasing the owner’s policy.
This is not because the agent or underwriter is trying to push the homebuyer toward buying both policies. It’s because the agent still has to do the same legwork to issue a lender’s title insurance policy.
This is another reason to shop several title companies before making a final selection.