Though negotiable with the seller, home buyers typically pay titling fees for their property purchase at closing, but sometimes lenders arrange for titling services on behalf of the borrower and may cover the fees until closing. Title fees are among the typical fees included in closing costs on a mortgage settlement when the home purchase is finalized.
Titling fees include a title examination fee as well as title insurance premiums. A property title designates the legal description of the property and its legal owners. Upon purchase, title is transferred to the buyer. Title insurance protects against undiscovered liens or claims against the property. The titling company performs a search of title history to make certain the title is free of any legal claims. The insurance covers your financial obligation if any liens or debts are later discovered.
Lenders are just as concerned that you get a clean title on your home as you are. They have certain requirements of mortgage borrowers to protect against significant risks that come with financing home purchases. One is the lien they place on your property should you fail to repay. Another is the requirement that you carry homeowners insurance. Title search and insurance is also required as a financial protection for the lender's investment.
Typical Costs and Negotiation
Tallahassee, Florida-based Padgett Title Services indicates its title examination fees are typically around $150, as of 2009. Insurance costs vary based on the purchase price of the home. Usually, insurance is a few hundred dollars, depending upon the price of the home. While it is common for buyers to pay these fees, you can negotiate with the seller or ask them to pay. Some sellers offer to pay buyer closing costs as a promotion to entice a purchase offer. Others are willing to pay them to invoke a sale, especially if they are anxious to sell.
You can shop around in your local market and select your own titling company to perform a search and provide insurance. This may allow you to save a little money on titling fees. However, many lenders have established partnerships with title companies in your area. Many buyers simply do not take the initiative to shop around or do not realize they can. Often, though, if title fees presented by your lender seem reasonable, it is efficient to allow the lender to work with an established partner. Additionally, many states, including Texas and Florida, regulate title insurance and require all insurers to offer standard terms and charge the same fees based on the sales price.