How important is title insurance?
Title insurance protects you and your lender if another party comes forward claiming to have rights to your property. The most common claims are back taxes, liens, and conflicting wills. With title insurance, you and your lender won’t have to pay for litigation to resolve the dispute.
In Pennsylvania, title insurance is mandatory for real estate purchases secured by a mortgage. If you pay in cash, title insurance is optional. However, it’s still wise to purchase title insurance as the risks remain regardless of how you pay for the home.
As with other types of insurance, title insurance can feel like an unnecessary cost if you never need to use it. But it’s a small price to pay to protect your interests – for as long as you own the home – if anyone challenges your title.
What is the difference between a lender’s policy and an owner’s policy?
There are actually two types of title insurance – the owner’s policy and the lender’s policy.
Only an owner’s title insurance policy protects you if a title problem arises. If you finance your purchase, you’re also required to purchase a lender’s title insurance policy. This protects the lender’s interests in the property if a title problem arises. It’s based on the dollar amount of your loan. The policy amount decreases as you pay down your loan and eventually disappears as the loan is paid off.
How much does title insurance cost?
Pennsylvania title insurance rates are regulated by the PA Department of Insurance. In PA, the rate includes the cost of the title search, title examination, escrow and settlement services. You’ll pay a one-time premium either before or after the closing. The policy is in effect until you sell the property to a new owner.
An owner’s policy is generally more expensive than a lender policy. You can expect to pay approximately $700 to $2,000 on title coverage for yourself. There are also different rates if you’re refinancing your mortgage.
Typically, lender’s title insurance costs are $500 to $1,500, based on where you’re located and how much you’re borrowing.
How much is title insurance for you? Get a more precise quote by using the Trident Title rate calculator.
What is not covered by title insurance?
While title insurance provides great peace of mind for new homeowners, it’s important to understand what may not be covered by your policy. Be sure to read your specific policy to understand exemptions, as they vary from one company to another. Most standard title transfer policies will not cover issues arising from:
- Any defects to the property created after the policy has been created
- Missed mortgage payments
- Liens on your property from your own debts
- Violation of zoning or building ordinances
- Failure to obey the law
It’s also critical to investigate any potential late liens, especially if you’re purchasing a newly built home or flipped house. Mechanics liens are a guarantee of payment to builders, contractors, and construction firms. If these have not yet been filed at the time you purchase the home, this is usually not covered.
For added protection, Trident Title offers the Enhanced Policy, the most comprehensive coverage available for a modest one-time premium. The enhanced policy includes important coverages not provided in standard policies.
How can I save money on title insurance?
- Compare fees – Although insurance rates are the same across insurers in Pennsylvania, title insurance companies can charge fees at their discretion. It’s worth comparing to see if you can save a few hundred on your closing costs
- Ask the seller to pay – If you have some leverage, it’s common to negotiate for the seller to cover some of your closing costs such as title insurance.
- Bundle owner’s and lender’s policies – This is referred to as the simultaneous rate issue. If you’re paying for both, this can reduce the total cost.
- Ask about the reissue rate – If you’re refinancing, buying a newly built home, or buying a house that the seller purchased recently, title companies can offer a reissue rate. In other words, a shorter time period means a shorter title search – and a discounted rate.
Get your title insurance with Trident Land Transfer
Check out the Trident Title rate calculator to get a quote. More questions? Contact a professional at Trident Land Transfer Company. As part of the BHHS Fox & Roach family of companies, we’re here to provide everything a homebuyer needs.