What Are Title Fees And Why Do You Have To Pay It?

 

Introduction to Title Fees

Whenever a customer buys a home or refinances it, there are costs involved for insuring, reviewing, and modifying the title of that property.

These costs are known as — Title Fees because the “title” is a lawful document that proves that the property is owned by the individual.

Title fees are a group of fees linked with closing costs. Title fees pay a title company to evaluate, adjust and ensure the title of a property.

The title company performs a title search to find out if there are any potential issues with the title, like encumbrances or liens.

A wide range of costs can get covered under title fees, so let us look at a few of them to know what to expect out of them.

Where To Find Title Fees?

Title fees are listed as part of the Loan Estimate (LE) — They are documents that are legally required.

A loan estimate is a summary of the features, costs, and risks associated with the borrower’s mortgage.

Within 3 days of receiving a new application, every lender is obligated to provide an official Loan Estimate.

What Do All The Different Terms In The Title Fees Mean And Why Is It Required?

The specific terms used may vary a bit from lender to lender, but just by understanding the meaning of each, the borrower might be able to navigate any Loan Estimate without too much trouble.

Attorney Fee:

Depending on the state one is buying a home, an attorney could be required to provide an attorney opinion letter, review the title work, and hold and disburse funds all this work gets covered under this fee.

Closing Protection Letter (CPL):

The title company writes an agreement called CPL which protects the lender in case of losses caused due to misconduct on the part of the closing agent. This fee is charged by the title companies to draft the document.

Commitment:

A document that reveals liens, defects, and burdens that influence the property and all the necessities that must be met before insuring the title is called Commitment.

Owner’s Title Insurance:

In a situation when any title claims are made on the property then the Owner’s Title Insurance protects the homeowner.

Even though it is optional, but it is usually recommended for homeowners. An Owner’s policy lasts as long as the property is in the possession of the owner, so it won’t need to be repurchased if they refinance their home.

But would be required if they change home or buy a new home.

Lender’s Title Insurance:

Nearly all refinance and purchase transactions require Lender’s Title Insurance. As the name suggests, with this policy the lender is protected against losses incurred because of title disputes.

The lender’s premium is to be paid by the borrower, in a refinance transaction, and also in a few purchase transactions, the borrower may be responsible for the cost.

The lender’s premium depends on the purchase amount or the loan amount. So if either of the amounts increases, the premium will also accordingly increase.

Based on the location, the Lender’s Title Insurance cost also varies and it is strictly regulated on a state-by-state basis.

Settlement Fee:

The Settlement Fees are at the period referred to as the Closing Fee, they cover costs related to closing operations.

A few title companies list out each cost, whereas others simply bucket them all in one place, so it is very important for a borrower to know for sure as to what exactly are they paying for?

The cost of escrow, notary fees, deed prep fees, survey fees, and search abstract fees are the costs bundled under the Settlement Fee.

Search Abstract Fee:

A Search Abstract fee is paid to a third-party vendor for the purpose of disclosing historical information about the ownership of the property. These fees may appear as an individual item or can be included as part of the Settlement Fee.

Survey Fee:

This fee is paid to a third-party vendor to inspect the property and confirm its boundaries if needed. It may emerge as an individual item, or be included as part of the Settlement Fee.

Notary Fee:

The notary fee is the cost for getting a notary to meet the owner at a specified location for the closing and it also includes the process of sending the copy which is scanned and mailing the physical copy to the title company.

Deed Prep Fee:

When a title is transferred, or an existing deed has to be modified as part of a transaction then a Deed Prep Fee is applicable. For instance, when a home is purchased, the deed title must be transferred from the seller to the buyer.

A deed may also be required when refinancing or when the marital status has changed, or in case of other people needed to be added or removed from the title.

Endorsement Fee:

An Endorsement is a specific addition beyond a standard policy required by a lender to the coverage.

For instance, if near the property line a structure gets built, the policy may be expanded to cover the cost of relocating or rebuilding it in the event of a dispute.

Recording Fee:

The title company does not set Recording Fees, they are set by the county, These are charged to cover the cost of entering deeds and mortgages into the land records.

If a home is being purchased, the recording fees may include transfer taxes and intangible taxes.

As this fee is an estimate, if these fees end up being less than what the borrowers were quoted, they will be reimbursed for the difference.

What Are Junk Fees How To Spot Them?

While most of the fees listed on the Loan Estimate are required for closing, it’s advisable for the borrowers to keep an eye out for any padding that may have been added to the estimate.

If they find any of the below-mentioned fees, then they need to ask their lender what it means, and why are they necessary because they may not be legit.

Application Fee

Rate Lock Fee

Loan Processing Fee

Underwriting Fee

Courier Fee

Overnight Fee

How Much Do The Title Fees And Recording Fees Cost?

Hypothetically the title fees can range anywhere between $200 to $400 for an update or about $1000+ if a new title must be created.

Recording fees are the costs associated with filing deeds and other official documentation with the borrower’s county’s public records. The national average for the recording fee charge is around $125.

Conclusion

Title fees are part of the closing costs that a customer pays when they are getting a mortgage.

A home buyer while purchasing a home, receives a document which is called a deed, this deed shows the seller transferred their legal ownership, or title, to the home to the buyer.

The title fees are costs connected with issuing a title insurance policy for the lender.

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