A few weeks ago, I wrote a post about Title Insurance. Little did I know, my post was going to cause more questions. In my research, I contacted title companies and lenders and couldn’t get a concrete answer on the cost of title insurance for a buyer. Remember, the buyer pays for the lender policy. Finding the cost for a seller (who buys the owners policy) is pretty simple, each title company has what they call a rate card and the policy rate is based on the purchase price of the home. Easy enough. But what you should know is that the money may not end up in the title companies hand. In fact, they give quite a bit of their share to the sellers attorney. Yep, not only does an attorney get paid by his client, he also gets paid as an agent of the title company for his review of the title documents. Its no chump change either. One title company actually gives the attorney $1100 on a $1500 policy. So who is really getting rich in real estate?
Now, the lender policy is a bit trickier to figure out. At Chicago Title, for example, a lender policy is $320.00 so long as it is being issued at the same time as the owners policy (the one the seller pays for) which it is most of the time. But that’s not the end of it, and this is where it gets tricky providing an accurate estimate of cost to our buyer client. There are lender required endorsements added to each policy. And of course, each lender is different as to what they require.
Similar to a homeowners policy where you would pay extra to insure jewelry or collectibles – a lender may require that your title policy have certain endorsements. A comprehensive endorsement is $25.00. Though I am not sure what that covers that a basic policy does not. Then there are EPA, adjustable rate, location, condo and PUD endorsements. The condo endorsement literally is confirmation that the title is on the correct unit number, location is to confirm the right single family address, and PUD is for town homes. At Chicago Title, these endorsements cost $135.00 each.
Oh yeah, and the title company charges around $75.00 for a policy update fee to cover the time between when the policy was ordered and the closing.
Finally, buyers will also get hit with a fee for the the actually closing. The fee for a closing can range from $250-$800.