If you’re just getting into the home-buying process, you might be curious about what fees you’ll have to pay between now and the time that you close on your home. Title fees are an important part of these expenses. The title fees encompass public records searches, insurance and more that come together to help protect both the homebuyer and the lender. It’s a good idea to understand what fees you will be responsible for and how much they might cost you.
Understanding Title Fees at Closing
When you purchase a home, a lump sum is due at the time of closing on the home. This is when you sign documents and the ownership of the home is officially transferred. A major part of the closing costs are from the title fees. These fees go toward a variety of services that have occurred behind the scenes. This includes a search of public records to make sure that there are no unknown parties who have a claim of ownership of the home you’re purchasing. It also covers the time and effort the title company and other parties put into performing these services.
List of Title Fees and How Much Each Cost
Your title fees cover a variety of title services that occur during the closing process. Although your title company or lender may not provide the exact breakdown of each fee, several smaller costs make up the total title fees. Here’s where that money goes:
Title Search Fee
The title search fee is used to search public records for the property being purchased. A title search will look for confirmation of who owns the property. If there are any claims or liens on the property, the title search should find those as well.
Title search fees are usually $200 or less.
Title Closing Fee
The title closing fee — also referred to as the title settlement fee — is what the title company charges to cover its administrative costs for closing on the home. In some cases, the title company might list all of the small coverages that go into this fee, but this is not required. The entire closing fee might also be included in another fee, such as the attorney’s fees. The cost of this fee will vary based on how the title company charges it.
Title Insurance Fees
Title insurance fees are broken down into two types — the lender’s title insurance and the owner’s title insurance.
The lender’s title insurance is meant to protect the lender if any claims or liens come up on the property. In most cases, the mortgage lender will require a lender’s title insurance policy because claims can come up even after the title company has cleared the title of the property. It covers the life of the mortgage and usually costs between 0.5% and 1% of the home’s sale price.
An owner’s title insurance policy is meant to protect the owner from claims or liens that come up on the property after the title company has cleared it. It is not required but can be invaluable if something comes up long after closing. For example, if someone has a deed showing that the home was theirs, they could have a claim on the home. This could jeopardize your ownership of the home and leave you responsible for the mortgage even if the home is turned over to the previous owner.
Attorney Fees
Some states require that a real estate attorney help with the closing process. If you hire a real estate attorney, their fee will cover the attorney’s time to review the paperwork, which can include the title of the property. Each attorney has control of the fees that they charge — some charge a flat fee while others charge an hourly rate. Buyers can usually expect to pay at least $750 for a real estate attorney.
Title Indemnity Fees
A title indemnity fee is the fee that a title company charges to ensure that your property taxes are paid on time. This benefits both the buyer and the lender and is a bit different from an escrow. Title companies typically charge between 150% and 200% of the prorated amount of the last known tax bill for half of the year.
Title Endorsement Fee
Title endorsements offer additional coverage beyond a standard title insurance policy. They get more specific by either adding coverage that is specific to the property or by modifying some exceptions. The cost is relatively small, with most costing less than $75. However, the cost depends on the state where the home is being purchased and the underwriter.
Abstract Fees
After the title search is completed, the title company will send a summary of the search in a document called the abstract. The fees for an abstract can range from $200 to $1,000 or more.
Recording Fees
A recording fee is used to cover the cost of filing official documentation — including deeds — with the public records in the county where your new home is located. The fee can vary but is usually around $125.
Notary Fee
Notary fees cover the cost of having a notary public witness the signing of important documents related to the home closing. The fee can vary widely, but most notaries charge less than $20 per signature.
Junk Fees
Junk fees are unnecessary fees that some lenders and title companies might include in your closing costs. According to the Consumer Financial Protection Bureau, these fees can include excessive late fees, unnecessary inspections and fees that were charged illegally.
How Much Do You Pay for Title Fees?
The cost of title fees can vary based on where you live and your home’s purchase price. Overall, you can expect to pay between 3% and 6% of your home’s purchase price in closing costs, which includes the title fees.
Take a home with a purchase price of $250,000 as an example. Here’s how the title fees might break down for this home:
Title search fee: $200
Title closing fee: $300
Title insurance fees: $2,500
Attorney fees: $750
Title indemnity fees: $5,000 (using $5,000 as the last known cost of the property tax)
Title endorsement fee: $75
Abstract fee: $300
Notary fee: $30
Junk fee: $0
Using these numbers, the total title fees for this home would be $9,155.
Where Can You Find Your Title Fees?
Title fees are listed in your loan estimate as well as your closing disclosure. These documents should be provided to you by your lender, after which you can review them. Owner’s title insurance is not required, so you’re not likely to find the owner’s title insurance fee in the same area. If you purchase owner’s title insurance, it should be listed in section H of your loan estimate.
Buyer vs. Seller: Who Pays the Title Fees at Closing?
The buyer typically assumes the cost of the title fees. This includes the owner’s title insurance policy if you decide to purchase one. Like some other closing costs, there is some room for negotiation. The buyer can ask the seller to pay for some of the title fees through their real estate agent or real estate attorney. The seller is not required to agree to this request, but they may be willing to pay for some of the closing costs to help move the sale along.
Preparing for Title Fees
Title fees are an important part of the closing process, but the process as a whole doesn’t require much effort from the home buyer. Your responsibility as a buyer is to review your loan estimate, closing disclosure and other documents to ensure that you understand your requirements and what you’re being charged for. As long as you understand the title fees and can afford to pay for them as well as the rest of the closing costs, you’re in good shape.
Frequently Asked Questions
Are title fees negotiable?
In most cases, no, the title fees are not negotiable. However, you may be able to negotiate with your seller to see whether they will cover some of the cost.
Do title fees vary from state to state?
Yes, the amount charged for each title fee is based on a few factors, including the state where the home is purchased and the purchase price of the home.
Can I shop around for title fees?
In most cases, yes, you can shop around for the services that are covered by title fees.