FIT Blog

When buying a piece of property, there are so many things that you need to be prepared for – especially when it comes to the closing costs. After all, you don’t want anything to get in the way of getting the keys to your new place. 

Title insurance is just one of the many different closing costs you may be responsible for when that day arrives. Gaining an understanding of what it is and how to calculate its cost can give you the opportunity to arrange your funds appropriately.

The Value of Title Insurance

The title to the property you are investing in has likely been transferred from one party to the next over the years. And during that time, a lot can go wrong, such as: 

• Unpaid taxes
• Liens
• Judgments
• Bankruptcies
• Easements
• Encroachments
• Unknown heirs
• Forgery/fraudulent transactions
• Missing wills

A title search will find any title issues that exist. And title insurance protects against any that arise after you take ownership – including anything missed during the search. This is important since title issues can threaten your property rights.  

Without title insurance, anything that comes up after you become the legal owner will require you to handle it with your own resources. Unfortunately, this could end up costing you your property. However, with a title insurance policy, you simply file a claim and let them do the work for you. 

How Much Does Title Insurance Cost?

Now that you have a better understanding of what title insurance is and why you need it, knowing how much it is going to cost can help you to be better prepared to cover the premium. 

The cost of title insurance is based on the sale price of your property. And, the basic calculation set by New Jersey state law looks like this: 

Sale Price of Property Cost Per $1,000

$0 – $100,000                        $5.25

$100,001 – $500,000           $4.25

$500,001 – $2 million           $2.75

Over $2 million                       $2.00

This means if you were buying a home for a sale price of $300,000, the cost of the title insurance would be about $1,375. 

(100,000 / 1000) * $5.25 = $525 

(200,000 / 1000) * $4.25 = $850

Total = $1,375

Because things in life can change at any moment and title insurance calculations can vary from state to state, it is always a good idea to discuss the title insurance fee with your title company. They will be able to give you an up-to-date specific insurance cost prior to closing. 

Paying Your Title Insurance Premium

After going through all the calculations to determine the cost of your title insurance policies, you may question just how long you will have to pay for your policy. 

Unlike other types of insurance that have policies renewing annually, bi-annually, quarterly, etc., title insurance is only paid once. You will pay your premium one time at closing – and that’s it. You will be covered.  

An owner’s title insurance policy will protect you for as long as you or your heirs have an interest in the property. And a lender’s title insurance policy will protect the lender until the mortgage is satisfied – whether due to being paid off or refinanced. 

Title Insurance at FIT Agency

You won’t want to miss out on the protection title insurance will bring you. Therefore it is something you want to plan ahead for so that you have the cost of the premium available at closing. 

FIT Agency is right there with you to answer all of your questions about title insurance along the way. 

To learn more about title insurance and how much you can expect your premium to be, contact us today at (732) 630-0900.