What Title Fees Will You Pay At Your Closing?

When closing on a home, there are costs associated with the sale. Home buyers can typically expect to pay about 3% – 6% of a home’s purchase price in closing costs. Title fees are one of the major closing costs of buying a home.

When preparing to buy a home, understanding the title fees can help you calculate your upfront costs. We’ll cover title fees in the home buying process, including who pays them and how much they cost.

What Are Title Fees?

Title is the right to own and use a property. Title fees are a range of fees associated with closing costs. These fees compensate a title company for reviewing, adjusting and insuring the title of a property.

The title company performs a title search to uncover any potential issues with the title, such as encumbrances or liens. The company will then make the necessary changes and ensure that their findings are correct.

The fees associated with a title search can vary depending on your situation. Mortgage preapproval can provide a good ballpark estimate if you’re unsure what to expect from your total closing costs.

Types Of Mortgage Title Fees

Title fees refer to various title expenses. The fees a buyer or seller pays will depend on their respective circumstances and the terms of their purchase and sale agreement.

Here are some common fees, what they cover and their average costs:

Title Search Fee

A title search is an investigation of a property’s public records to verify its owner. The search can also reveal any known and unknown claims or liens on the property.

A title search can cost $75 – $200, depending on various factors, including the property’s location. The seller typically pays this fee.

Title Settlement Fee

The title company charges a title settlement fee, also known as the closing fee, to cover the administrative costs of closing. Title companies may or may not break out the individual costs of the fee.

The title settlement fee generally covers:

• Escrow fees (handling and disbursement of funds)
• Survey and notary fees
• Deed prep fees and other costs associated with a title search

The settlement fee, which can vary, may also include attorney’s fees.

Lender’s Title Insurance

Lender’s title insurance protects lenders – not buyers – from any claims on a property. Mortgage lenders typically require lender’s title insurance because something can still come up even after a title company clears the title.

Lender’s and owner’s title insurance are often bundled and purchased together for a one-time fee that typically ranges from 0.5% – 1% of a home’s total purchase price. For example, you may pay a $3,000 title insurance fee on a $300,000 home.

A lender’s title insurance policy covers a loan’s entire term. If you refinance your loan, you must purchase a new policy.

Owner’s Title Insurance

Much like lender’s title insurance, owner’s title insurance protects the owner from any overlooked claims or liens on the title. Insurance will cover up to the purchase price of the property.

For example, suppose you buy a house, and 2 years later a relative of the previous owner shows up with a deed claiming rightful ownership of the property. Owner’s title insurance can protect you in this scenario. Without it, you would risk losing the house and still being financially responsible for the mortgage.

While optional, owner’s title insurance is highly recommended for home buyers. It’s extra security that can potentially cost less than what you may pay to resolve an unexpected future claim on your title. The policy remains in effect for as long as you own the home.

Attorney Fee

If you hire a real estate attorney (as required in many states), you’ll pay attorney fees. The fees cover the cost of an attorney reviewing paperwork, including the property’s title.

Abstract And Recording Fees

An abstract is a summary prepared by a title company based on the findings of the title search. It compiles the details of the search and related official documents. It typically costs between $200 – $400 to update a title abstract and potentially more than $1,000 to create a new abstract of title.

Recording fees, which can cost around $125 on average, pay for the costs associated with filing deeds and other official documentation at a county’s public records office.

Where To Find Your Title Fees

You can find title fees and overall closing costs on a couple of documents:

• Closing Disclosure: Your Closing Disclosure will break down your total closing costs, including title fees, in an itemized list.
• Loan Estimate: A Loan Estimate is a lender's estimate of your total closing costs, including title service fees and the cash you’ll need to bring to closing.

Who Pays The Title Fees At Closing?

Who pays what fees depends on where you live. In some parts of the country, it’s customary for the seller to pay the owner’s title insurance and the buyer to pay the lender’s title insurance. The buyer also typically pays recording and title search fees.

Regardless of where you are, who pays which fees can be negotiated and formalized in the purchase agreement.

How Much Are Title Fees On Average?

Title fees can vary by title company, location and the range of services a title company performs. Closing costs, which title fees are a large part of, cost 3% – 6% of a home’s purchase price. On a $300,000 home, you can pay between $9,000 and $18,000 in closing costs.

Are Title Fees Negotiable?

While title fees are typically determined by state and local government agencies, who ends up paying a specific fee is negotiable.

If the conditions are right, a buyer may be able to negotiate that the seller covers all or part of the closing costs, including title fees. When a seller agrees to pay closing costs for a buyer, that’s an example of a seller concession.

The Bottom Line: Title Costs Are Worth It

When transferring ownership of a home, many pieces must fall into place. You must ensure the title transfer process is well executed and gives you undisputed ownership of the property.

Any associated fees are well worth the assurance and legal proof that the house and property are yours. Work with your real estate agent or attorney to navigate these fees and consider which ones you can negotiate.

To estimate your potential title fees, down payment and closing costs upfront, start the approval process to get the numbers you need to create a realistic home buying budget. Plan ahead and start the application process today. You can also give us a call at (833) 326-6018.