The average homebuyer in Pennsylvania will pay about $10,000 in closing costs when buying a home. Many fees are included in the closing costs, including title insurance.

Still, ten grand is a considerable expense to consider in the home buying process. So is there a way to lower these fees and pay less? It turns out that homebuyers are encouraged to negotiate closing costs to get the best deal.

In this article, you'll learn how to lower the cost of a title insurance policy. Read on so you can use these tips during the home buying process.

WHAT IS TITLE INSURANCE?

A title insurance policy protects your home from previous problems with the title after ownership has been transferred to you.

What problems with the title can arise for the new owner? Common issues include:

• Land boundaries disputes
• False impersonation of a previous owner
• Forgery
• Illegal deeds
• Missing heirs
• Public records errors
• Undiscovered encumbrances
• Unknown easements
• Unknown liens

You can buy two types of title insurance policies to protect you from these problems.

Lender's Title Insurance

The first type is lender's title insurance. This insurance is a requirement when financing a home. However, if you pay for a home in cash, you won't need to purchase this policy.

Although this insurance protects the lender, the buyer is the one who pays for it.

The policy guarantees the lender has the first lien on the house if there is a foreclosure or unpaid property taxes. It's a form of security for the lender should you not be able to keep up with your home payments.

If you need to refinance your home, you will need to buy a new lender's title insurance plan.

Yet, the cost of the new policy will be less than when you first closed on the house because you'll have more equity in your home, so the lender needs protection for a less amount.

Owner's Title Insurance

The second type is owner's title insurance, which is optional. This policy protects the property owner from ownership claims and problems like those mentioned above.

For example, if the previous homeowner left the property with unpaid HOA or property tax fees, the owner's title insurance will cover the expenses.

Most experts recommend buying owner's title insurance to handle any potential future title problems. Title problems are costly, making title insurance a good investment.

Buying a home is often the most expensive purchase many people will ever make in their lives, so protecting that purchase is a sound choice.

If you buy owner's title insurance, the policy will remain effective even if you need to refinance your home. The policy lasts until you sell the property.

WHAT IS THE COST OF A TITLE INSURANCE POLICY?

The cost of title insurance can range from a few hundred to a few thousand dollars. Usually, the price comes out to 0.5%-1% of the value of your home.

Prices vary by state and depend on the price of your home. Some other factors that can affect the cost of your title insurance coverage include:

• Title search
• Examination
• Expected cost of any title defects

Title insurance is a one-time premium and, as stated, is included in the closing costs.

HOW TO PAY LESS FOR TITLE INSURANCE

The more money you borrow to purchase your home, the more expensive your lender's title insurance policy will be to protect the lender. Likewise, the more expensive your home's purchase price is, the more expensive your owner's title insurance policy will be.

Yet there are ways to pay less for title insurance. These tips will help.

Shop Around for a Policy

Some states regulate premiums, meaning prices are the same regardless of who you take the policy with. But for states that don't regulate premiums, going to different insurance companies for a quote is the best way to get a lower price.

You can compare prices and see which company offers you the best plan.

However, don't compromise customer service to save money. If you encounter a title problem, you want a team that will sufficiently guide you through the resolution process.

Once you receive several quotes, read reviews or talk to current customers of each company. You can also ask your real estate agent for recommendations about title insurance providers.

Bundle Your Policies

If you plan on buying owner's title insurance, find a company that offers both lender's and owner's title insurance. If you purchase both policies from the same insurance company, you can save money.

Most will offer a discount for buying them together.

Ask About the Add-Ons

As you shop around for title insurance, you may find that insurance companies are fixed in their pricing. But don't panic about not being able to negotiate.

Sometimes, the premium will be a set price that isn't flexible. Yet, the price usually includes other fees for add-ons. So ask about the cost of these additional services to see if you can negotiate the price down further.

Add-on services may be optional, meaning you could forgo them altogether if necessary.

Moreover, the company may be more willing to discount add-ons instead of the premium price.

Negotiate With the Seller

Don't forget that closing costs are open to negotiation. If the seller wants to close the deal quickly, you may get them to foot the bill for some closing costs, including title insurance.

But proceed with caution. Anytime the seller offers to pay for something or make concessions to close the deal faster, ensure you do your due diligence to ensure you don't inherit any problems with the property upon purchase.

This could be a problem with the title, home inspection, etc. Your real estate agent can help you do due diligence and close the deal promptly.

LEARN MORE ABOUT TITLE INSURANCE

Title insurance is a must when closing on a house. Those who finance their home need to purchase lender's title insurance, and many also opt for owner's title insurance.

Yet the cost of a title insurance policy will vary widely depending on several factors discussed here.

Reach out to us today at Heartland Abstract to learn about our standard and enhanced title insurance policies. Our team has more than 50 years of experience offering affordable title insurance to home buyers in Pennsylvania.