Title insurance is a layer of protection that is offered when buying a new property. Because costs can really add up at closing, it is not uncommon for buyers to feel a bit hesitant to agree to purchase the policy. While they may want the protection, the question becomes - how much does it cost?
Let’s take a look at how title insurance is calculated so that you don’t miss out on this important policy.
What is Title Insurance?
A title search is performed on a property before the closing takes place. This is done to make sure that the title is clear without any encumbrances - and it also confirms that the person selling it is allowed to do so.
The title examiners are looking for things such as judgments, liens, forged documents, fraudulent transactions, bankruptcies, easements, outstanding taxes, and so forth. Though despite their diligent look at the title, hidden defects on title cannot be found during that intensive search.
Anytime a title defect arises, it can threaten the new homeowner’s right to their property. Title insurance protects the new owner and/or the lender, reducing this risk.
Keep in mind that just because the idea of title insurance is the same throughout the country, what it covers and what it costs can vary greatly. For instance, title insurance always protects against the threat of things that happened before the new owner took possession. An enhanced policy can be purchased which will also cover some post policy items, such as post policy fraud. (Some one forges a deed for your property and transfers the property to themselves!) And a few things that title insurance usually does not cover in Pennsylvania include:
Survey coverage
Loss due to poor inspections
Infestations
How is Title Insurance Calculated?
As set forth by the PA Department of Insurance, title insurance cost for the basic policy is based on the rate and the amount of insurance you require (Owner’s coverage is based on the purchase price and the loan coverage is based on the mortgage amount) . For example, for coverage up to $30,000, the sale rate is $569.00 and the non-sale rate is $512.00. It then goes up in increments depending on the coverage. The enhanced policy is at a slightly higher premium.
Title insurance in Pennsylvania is calculated the same way throughout the state. And it includes the cost of the title search, the title examination, title policy as well as escrow and settlement services.
It is important to note that there are different types of owner's title insurance - more specifically, enhanced and non-enhanced (standard) title insurance. You will need to keep this in mind when calculating the cost of your title insurance as each policy type comes with its own rate.
Working closing with a title company can give you access to the details of your closing costs and title insurance fees. The lender will include the cost of the loan policy with their cost estimate, but keep in mind that the loan policy does NOT protect you, the new home owner. The cost to provide owner’s coverage when issued simultaneously with the loan policy is simply the premium for any additional coverage provided to the Owner. (the difference between the mortgage amount and the purchase price) For specific information for your transaction, please contact us.
How Often is Title Insurance Paid?
Title insurance is only paid one time at closing. Unlike other types of insurance that require annual or even monthly premium payments, title insurance only requires one.
The policy will protect an owner for as long as they have an interest in the property. A lender's policy will protect the lender until the loan is satisfied.
Learn More About Title Insurance
Liberty Land Transfer is a title company in Pennsylvania devoted to developing long term relationships. Our clients value our diligence, flexibility, and attention to service. Contact us to discover why we are the right company for you.
At Liberty Land Transfer, we understand that not everyone spends their life dealing with title insurance. But, we do. So, if you have questions about what title insurance protects or how much it is going to cost for your home purchase, we have the answers.
Contact us today at (866) 216-9999.