Title insurance costs range from 0.5% to 1% of your home sale price. While it may seem huge, it’s a small price to pay compared to the $106,000 that buyers lost on average in title fraud in 2023.
However, Y-O-Y, there’s been a 20% drop in fraud, as many home buyers are opting for title insurance. Your new home is a major financial investment; protect it with a title insurance policy to ensure you don’t lose thousands of dollars.
What Is Title Insurance in Real Estate?
Title insurance is a policy that protects the interests of both the buyer and the mortgage lender from issues related to a defective property title. Some of these issues include:
- Property border disputes
- Encroachments
- Easements
- Forged documents
- Third-party claims
- Errors in recorded documents
- Incorrect property deed
How Much Is Title Insurance Cost?
Title policies usually cost about 0.5% to 1.0% of the home’s sale price and are included in the closing costs. Title insurance costs vary according to the state you live in. You will either get a cumulative quote or an itemized policy breakdown.
It is not mandatory to have owner’s title insurance, but it is highly recommended to secure your property. However, Texas and Ohio have made it mandatory to have this insurance policy.
| Housing Price | Title Insurance Cost (per thousand) |
| Up to $50,000 of liability written | $4.50 |
| Over $50,000 and up to $100,000 | $4.50 |
| $100,000 and up to $250,000 | $4.50 |
| Over $250,000 and up to $500,000 | $3.90 |
| $500,000 and up to $1,000,000 | $3.10 |
| Over $1,000,000 and up to $5,000,000 | $2.70 |
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✍️ Important Note: The government regulates title insurance premiums in Utah and Texas. So, the policy cost will be standard across title companies.
What Does Title Insurance Cover?
A typical policy quote will include the following title fees:
| Coverage | Meaning | Fees |
| Title Search | Confirms details about the property’s legal ownership. | $100 to $250 |
| Title Settlement | Helps in the transfer of ownership from the seller to the buyer. | It depends on the state and settlement agent |
| Deed Preparation | Helps draft deeds and legal documents for the transaction. | $85 to $100 |
| Land Survey | Determines the land boundaries and draws legal property lines. | $200 to $800 |
| Real Estate Attorney | Helps with legal documentation and advises on real estate transactions. | $200 to $850 per hour |
| Escrow | A neutral third party that holds and disburses all funds and documents in a deal. | – |
Types of Title Insurance Policies and Costs
There are two types: the owner’s title policy and the lender’s title policy.
1. Owner’s Title Insurance Policy
This policy is usually available in 2 forms: standard and enhanced.
- Standard Policy: This policy generally protects the new owner from third-party claims like encroachments, undisclosed heirs, liens, etc.
- Enhanced Policy: This policy includes all the standard coverages and certain additional perks. These are protection from unrecorded liens (estate tax liens), building permit violations, post-policy forgery, etc.
If the median home price is $402,343, the Owner’s title policy would cost you around $1,845.70. It’s a one-time fee, and the coverage lasts as long as you or your heirs own the property.
» Want To Know the Best Time To Buy a House: Here’s a step-by-step guide.
2. Lender’s Title Insurance Policy
It protects the mortgage lender’s investment from any property-related issues like undisclosed heirs, forgery, and liens.
The policy cost depends on the loan issued. If the loan amount is between $125,000 and $250,000, the lender’s policy ranges from $500 to $1,000. In addition, the accountability of the title insurer decreases as the loan is paid off.
A lender’s title insurance policy is mandatory, and its period is equal to the loan term. Additionally, in most states, the homebuyer pays for the overall cost. However, in states like Nebraska and South Dakota, payments between buyer and seller are equally divided.
Average Cost of Title Insurance by State and City
The cost of home title policies varies from state to state and city to city.
| Region | How Much is Title Insurance Near Me |
|---|---|
| Northeast | Connecticut | Maine | Massachusetts | New Hampshire | New Jersey | New York | Pennsylvania | Rhode Island | Vermont |
| Midwest | Illinois | Indiana | Iowa | Kansas | Michigan | Minnesota | Missouri | Nebraska | North Dakota | Ohio | South Dakota | Wisconsin |
| South | Alabama | Arkansas | Delaware | Florida | Georgia | Kentucky | Louisiana | Maryland | Mississippi | North Carolina | Oklahoma | South Carolina | Tennessee | Texas | Virginia | Washington D.C. | West Virginia |
| West | Alaska | Arizona | California | Colorado | Hawaii | Idaho | Montana | Nevada | New Mexico | Oregon | Utah | Washington | Wyoming |
How to Save on Title Insurance Costs
Most of the companies have similar premiums, but there are some ways to save on costs:
- Bundle Plan: You can buy the owner and lender policies from the same company and avail of a discount.
- Shop Around: You can look for other companies if the premiums are unregulated in your state. Go through all the company reviews and compare quotes to finalize one.
- Negotiate Closing Costs: If the seller is motivated to sell the property, they may agree to cover the costs for the title insurance within the closing costs.
Other Alternatives
While title insurance is the most beneficial option for your new home, here are some of the alternatives you can consider:
- Attorney Opinion Letters (AOLs): These letters are personalized and provided by attorneys as an alternative to title insurance. AOLs may cost you a lower upfront fee; however, they can introduce more risk to lenders and consumers.
- Closing Platforms: Such platforms eliminate the need for traditional title insurance as they potentially reduce costs. For example, platforms like iTitle Transfer’s service can cost you around $1,500 for a $411,000 loan. On the other hand, you would require $3,085 in title coverage for the same.
Bottom Line
Title insurance is a necessary investment to protect your new home. Homeowners have lost almost $100k in fraud. You can save your money by paying 0.5% to 1% of your home sale price as title policy fees.
If you are looking for title companies, Houzeo can help you. On our platform, you can easily find one and book an appointment with the best title company nearby.
» Need More Clarity? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.
Frequently Asked Questions
What are title fees?
Title fees are a part of closing costs that include title searches, attorney and notary services, settlement fees, etc.
How much does title insurance cost?
The title insurance will cost around 0.5% to 1.0% of the home's purchase price.
How much is owner's title insurance?
Home title insurance costs between $1,500 and $2,000 for a property ranging between $303,600 and $446,500. Title policy costs depend heavily on the state you live in, the title company costs, and the coverage you choose.
Who pays the title insurance cost?
Generally, title insurance is paid by the homebuyer . However, in some states, the fees are equally split between the seller and the buyer. On the other hand, homebuyers pay for the lender's title insurance.
