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A Pennsylvania Property Title Insurance Fee Guide

Monday, October 17, 2022

Buying a home is a dream come true for many people. As you finance this dream, make sure that you're also aware and realistic when calculating the cost. 

Many people forget to factor in closing costs. 

In the United States, people pay an average of $5,749 (including tax) in closing costs when they buy a home. Closing costs typically range between 2% and 5% of the loan. 

Title insurance fees account for a significant part. You must understand these costs, whether you live in Pennsylvania or elsewhere. 

This guide will teach you about the title insurance fee, how it is calculated, and how you can shop for a good plan. 

What Is a Title Insurance Fee?

So, what is a title insurance fee? Title insurance is the type of policy that protects against any problems you might encounter with a property title. Examples of problems that prevent a title from clearing include liens and property defects that weren't known at the time of the sale. 

PA title insurance fees are issued during closing to secure the correct policy based on the home or other property you're purchasing.  

What Are the Advantages of Title Insurance?

You're required by law to get title insurance anytime you close on a property that is paid for with a mortgage loan. If you're buying a property with cash, title insurance is still encouraged but is optional. 

To better understand title insurance fees, you should get to know what this insurance protects you from and why it's so important. 

Title Insurance Protects all Parties

When you shop for title insurance quotes, understand that you're making a decision that benefits all parties involved. Having this insurance protects the buyer from taking a loss with a property that had more damages or issues than they accounted for. 

It also protects the buyer from losing money in a lawsuit. Third, it protects the bank that is issuing the mortgage loan.  

You Are Protected From Fraud

Unfortunately, the risk of fraud is always at play anytime you do business with another party. Getting a title insurance quote and purchasing a plan protects you from fraudulent circumstances. 

This might include someone passing off a property that they don't have the right to, or creating false title documents altogether. 

It Offers You Peace of Mind

There's always an element of blind trust that comes with a business deal. With Pennsylvania title insurance, you get the benefit of the advice to "trust but verify." 

Whether someone is trying to defraud you with a purchase or you run into an honest, unfortunate mistake, you won't take losses when you have title insurance. This peace of mind lets you jump on a good deal when you find one without having to look back or think twice.  

How Much Are PA Title Insurance Fees?

Title insurance fees are issued on a strictly case-by-case basis. The only way to know for sure what you will pay is by seeking a PA title insurance quote. 

Learning how title insurance fees are calculated will help you get a better idea. 

The main thing to know is that your title insurance fees are contingent upon the value of your home. So if you purchase a pricey home, you should naturally expect to pay more in fees. 

Many companies assume a percentage-per-thousand formula when calculating title insurance fees. 

For example, let's say that you're purchasing a home for $600,000, which has a .6% per thousand rate. This means that you would ultimately pay $3,600 in title insurance. 

Find out the specific formula that your company charges at the time of your quote. Things like the amount you offer on a down payment will also come into play.  

On average, people pay 7% in home purchase down payments. Negotiate these matters during closing so you can protect your home purchase while having some say on how title insurance is handled.  

The cost of your title insurance is often lumped in with the cost of the home. It might look pricey on paper, but keep in mind that it's something that you have to pay for one time for the entire duration of your 15 to 30-year mortgage or whichever other agreement you signed up for. 

How Can I Shop for Title Insurance?

Once you and the other party have agreed to terms on a property, it goes into escrow, and you move into the closing period. During this period, they will handle things like land record searches, property inspections, and title research. 

Look for the ideal title insurance policy when going into these processes to know you're covered during the closing. Get everything in writing upfront, especially if you have negotiated that the seller will pay the closing costs. 

Regardless of who pays closing costs, ask for an itemized list of everything that you're charged. In addition to the title insurance fee, there may also be charges for getting copies of government documents and other types of searches.  

Covering Title Insurance During Closing

Now that you know the title insurance fee and what it's all about, you should do everything that you can to shop for the best rate. It's one last piece of the puzzle that stands between you and getting the keys to your brand-new home.  

Heartland Abstract can assist you when you are ready to choose a policy. Read up on our policy information and contact us at (610)326-6300. 

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