When I review estimated closing costs with home buyers, we always spend time looking at Title Insurance because it is typically one of the largest expenses on the worksheet. Since most people buying real estate are going to have a mortgage, title insurance is going to be a requirement of the lender if you want them to provide the loan. Title insurance is purchased at the time of closing/settlement.
In Northern Virginia real estate, it is customary that the home buyer purchases the title insurance policy. In some states the cost is split between buyer and seller.
Now, let me be clear that I am not an attorney nor am I affiliated with a Title Insurance Company, I am a licensed real estate agent who has seen the benefits of having a policy in hand when transactions are happening. One example was when clients were selling their home and the new title search uncovered an unsatisfied lien from 1969… three owners ago! When they had bought the house I recommended they buy “owner’s coverage”, so they provided the title insurance policy and their house sold on time. There was another issue when a mortgage lender had not recorded as Certificate of Satisfaction when the owner had refinanced the home… again, the title insurance policy saved the day.
I advise that all my clients buy an “owner’s policy” which includes the lender’s required coverage too. It typically costs just a few hundred dollars more but is essential just in case a future issue emerges after closing on the house.
- Home buyers paying cash are also advised to include a title insurance policy.
- New home buyers are advised to buy a title insurance policy that includes Mechanic’s Lien coverage.
My Cost Estimate for Virginia: I multiply $4.90 x each $1,000
So, if the sales price is $450,000 then the estimated title insurance will cost $2,205.
If the property you are planning to buy was bought within the last four years, try and get a copy of the seller’s existing title insurance policy to provide to your closing attorney or title company. With that in hand, you should get a good discount because the policy will qualify for a Re-issue Rate saving around 30%.
Home buyers should also ask the title company to ask what the cost difference is between a buyer’s standard policy and an enhanced policy.
There are plenty of web sites that will explain to you the many reasons behind the importance of having title insurance policies on your home. For more information, The American Land Title Association (ALTA) provides consumer information on their web site.
- A Look at Title Insurance (stroupecondoblog.com)