There is no denying that buying a new home can be expensive. Not only do you have to come up with a down payment, but there are others too, such as an earnest deposit and closing fees.
The good news is that everything plays a role in protecting your transaction and your future ownership rights. Understanding the costs and being prepared for them is the best thing you can do.
So, how much does title insurance cost? Let’s find out.
Understanding the Value of Title Insurance
Title insurance protects the new owner’s interest in the property. After all, there is a good chance that it has changed hands several times over the years, resulting in title defects, such as:
Unpaid taxes
Judgments
Liens
Bankruptcies
Encroachments
Easements
Missing wills
Unknown heirs
Recording errors
Forged signatures
Fraudulent transactions
Sure, a title search reveals a lot of information, but there are instances where something may get missed — especially with recording errors and fraud. Title insurance safeguards the property in these situations, fighting the fight and securing your financial interest.
Understanding the value of title insurance helps buyers understand the urgency of purchasing title insurance at closing.
Things To Consider When Purchasing Title Insurance
Having to spend money for an additional purchase at a real estate closing is not something anyone looks forward to. However, having to pay to fight off just one claim against your property and put your ownership rights at risk can easily exceed the cost of a title insurance policy.
Know this — In Michigan, it is customary for the seller to purchase the owner’s title insurance policy. This can help the buyer benefit from the insurance without having to come up with more money.
If financing, the lender will almost always require a lender’s title insurance policy. This is different from the owner’s policy in that it solely protects the lender. The buyer is responsible for this purchase.
Unlike other types of insurance, title insurance is only paid for one time. One lump sum payment at closing gives you an owner’s policy that will last as long as you have an interest in the property and a lender’s policy that lasts until your mortgage is satisfied.
So, How Much Does Title Insurance Cost?
The cost of title insurance will vary based on your state or, in some instances, your county. In Michigan, the title insurance rates are set and regulated by the Michigan Department of Insurance and Financial Services. Title companies charge their clients based on these rates.
What does that mean for real estate transactions throughout the state?
The cost of title insurance is directly related to the type of insurance. The lender’s title insurance policies are calculated based on the amount of the loan. Owner’s title insurance policies are calculated based on the sale price of the home. Both use the same rates.
Generally, this will work out to being somewhere between .05% to 1.0% of the loan amount or sale price. The cost is calculated at a rate per $1,000 of either.
Your title company may also include additional fees, such as:
Title search fees
Title settlement fees
Notary fees
Document preparation fees
Land survey fees
Work closely with your title company to obtain a quote for your title insurance — and fees for facilitating your real estate transaction so that you are ready to go on settlement day.
Want to Learn More About Title Insurance?
At Blue Pointe Title Agency, we want you to have the smoothest real estate transaction imaginable. That’s why we commit to providing our clients with outstanding service every step of the way.
Have questions about title insurance? Want a quote? Our team is here for you. Contact us today at (517) 258-1511.
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