When you purchase a home, you're paying for more than just the price of the house. You must also pay for all the paperwork filed to make the sale happen. Plus, you need title insurance.

So how much should you expect to pay for title insurance? That number depends on your house's cost and what fees you need to pay your title insurance company or your abstract service.

By the time you've finished reading this article, you will understand Pennsylvania title insurance rates and how to calculate title insurance.

WHAT IS TITLE INSURANCE?

Sometimes a property isn't as clean as a seller makes it look. The seller may work hard to make the property itself as physically attractive as possible, but the title on the property could have some hangups.

You will have difficulty closing the sale for a piece of real estate, for example, if there are unpaid property taxes or a relative claiming they own the property. Sometimes there will also be fraud involved with paperwork or forgery of previous paperwork. Such a bad title makes the property unsaleable.

Title insurance protects you from these hangups. When you pay for title insurance, you're paying the title company to investigate and correct problems with the property's title. This way, you can have a title free of these hangups when you purchase the property.

WHY DOES THE COST VARY?

The cost of your title insurance will vary. It all depends on the value of your home. The more valuable your home, the higher the cost of your insurance.

Title insurance companies will multiply the purchase price of your property by the rate per thousand that your insurance company uses. So, for example, if you buy a $300,000 home with a rate of 0.6% for every thousand, you will pay $1,800 for your title insurance.

Some companies will use a different method to calculate their title insurance costs. For example, they may use the percentage-per-thousand formula for homes that cost up to $100,000 and then change the cost to a general cost for homes up to $1,000,000. The fees the title insurance company charges will also factor into the final cost of title insurance.

The fees cover services such as a title search and examination as well as addressing the title defects.

At the close of the sale, the title insurance costs will look expensive. The final bill for your home will include these costs, providing you with a one-time purchase. This way your insurance costs will not fluctuate, and they may seem expensive because you're making an expensive property purchase as well.

Here are a few examples of situations where title insurance premiums may differ.

PENNSYLVANIA TITLE INSURANCE RATES

Title insurance rates in Pennsylvania look much the same as they do in other states. Sometimes, you can land title insurance deals depending on the property you're purchasing. Ask the title insurance company about any specials they may offer for your particular type of property.

Title insurance includes three major services and functions:

1. Land record search and examination
2. Settlement and escrow services you need when closing your transaction
3. The insurance risk the title insurance company assumes when they issue your title insurance policy

Many states will charge extra fees for each of these services. Pennsylvania, though, is an all-inclusive state where the charge for title insurance includes all of these costs as well.

The all-inclusive service isn't just a nice perk that some companies offer in Pennsylvania. It is the law. Pennsylvania statute 910-1(5) states that "fee" for title insurance means and includes all of these charges.

EXCEPTIONS TO ALL-INCLUSIVE RATE

The laws regarding title insurance in Pennsylvania give room for fees outside these services. These fees may still be essential to the title transaction but are not covered by the all-inclusive rate.

For example, the charge for insurance does not include the following services, and thus the abstract or title company may charge for them:

• Government charges for recording essential documents
• Preparing documents other than the closing statement, commitment, and title insurance policy
• Overnight deliveries
• Cost of bank wire transfer of funds
• Printing and receipt of documents outside of the closing statement, commitment, and title insurance policy

There are a few other services that the law says the interested party will pay for, such as corporate standing certificates, corporate lien searches, uniform commercial code searches, and condominium, cooperative, and planned community certifications. You also may receive a charge for each filed endorsement, difficult title matters that involve difficult search costs, a special fee for affirmative risk coverage, and a $125 charge for issuing the Closing Protection Letter.

In the end, the type of policy you choose will also affect your overall rate. For example, some abstract companies will offer either a standard or enhanced policy. The enhanced policy will cost more upfront and include more services than the standard policy.

UNDERSTAND THE RATES AND FEES

Now that you understand Pennsylvania title insurance rates and fees, you can move forward with purchasing your property. Title insurance is essential whenever you're buying a property. It protects you.

And ultimately, it's well worth the cost, especially if your title company finds a problem with the title that could have compromised your ownership down the road.

Are you looking for a quality abstract company to act as the middle man in your property transaction? We can help. We serve both the seller and the buyer by issuing title policies and offering complete escrow closing services on commercial, residential, and industrial properties in the metro Philadelphia area.

Contact us today and let us help you finalize your property sale.