Who Pays for Title Insurance and How Do I Find a Company?
Buying title insurance is a pretty straightforward process. A title company will walk you through the process and will do almost all of the work itself. Still, there are some things to know about how to find a good title insurance company and how much the service costs.
When buying title insurance, look to your lender for the best recommendation. Its interests intersect with yours because it’s guaranteeing a large loan based on the property you’re using as collateral. Also, your lender will likely require you to get title insurance. Never rely on a seller’s recommendation as it could be biased.
The Real Estate Settlement Procedures Act, or RESPA, prohibits a lender, real estate agent, attorney or other person or entity involved from requiring the buyer to use a particular company. Homebuyers can shop for title insurance and a provider that best fits their needs.
The price of title insurance is regulated in many states, so there shouldn’t be much of a price difference between companies. The average title insurance policy has a one-time premium of about $1,000, covering all upfront work and ongoing legal and loss coverage. However, premiums can range from $200 or so to more than $2,000.
You want to find a title insurance company that has been around for a long time and will continue to be around. Verify that the underwriter is financially sound by checking financial solvency ratings at companies such as Demotech Inc. and A.M. Best Co. Also, research the underwriter and title company, or the attorney, to see what other customers have said about their service.
Homebuyers often pay for title insurance, so it’s in their interest to shop around for it. Some jurisdictions may require sellers to pay for it. Even if the buyer pays, title insurance is still an expense that can be negotiated by a real estate agent and split by both sides or paid entirely by the seller. If you’re not paying for title insurance but still want to choose the company, you may have to share some of the costs.
If the seller is pushing their title company, you may want to avoid it because it could lead to the same results from when they originally bought the house. A new title insurance company could find new records or summaries that a previous search didn’t unearth. This will give you a better chance of fixing any problems before you buy the home.
