A guide to understanding title fees

Whether you’re buying a home or refinancing, there are costs associated with insuring, reviewing, and modifying the title of that property. These costs are called “title fees,” because the “title” is a legal document that proves you own a property.

Title fees can cover a wide range of costs, so we’ve outlined a few of them below to help you know what to expect.

What are title fees and why are they necessary?

Title fees are charges associated with the transfer of property title from one owner to another. They cover the cost of title searches, title insurance, and administrative fees. These fees are necessary to ensure a smooth and legally sound transfer of ownership when buying or selling real estate properties.

Where to find title fees

Title fees are listed as part of your Loan Estimate (LE) — a legally required document that summarizes the features, costs, and risks associated with your mortgage. Every lender is obligated to provide an official Loan Estimate within 3 days of receiving a new application. So if you haven’t seen one yet, be sure to ask about it.

What types of fees are included in title closing costs?

Common fees include title search fees, which ensure the property’s title is clear of liens or legal issues, title insurance to protect against potential title defects, and settlement fees for the closing agent’s services. Other costs may include notary fees, recording fees, and courier fees for document handling. Understanding these fees helps first-time homebuyers better budget for closing day and avoid surprises.

Next we’ll define each item, and explain why it’s required. The specific terms used may vary a bit from lender to lender, but if you understand the meaning of each, you should be able to navigate any Loan Estimate without too much trouble.

###Attorney Fee

Depending on the state, an attorney might be required to review the title work, provide an attorney opinion letter, and hold and disburse funds. This fee covers that work.

###Closing Protection Letter (CPL)

The CPL is an agreement written by the title company that protects the lender in case of losses caused by misconduct on the part of the closing agent. (Title companies charge this fee to draft the document.)

###Commitment

A Commitment is a document that discloses liens, defects, and burdens that affect the property and all the requirements that must be met before the title can be insured.

###Owner’s Title Insurance

Owner’s Title Insurance protects the homeowner in case of any title claims made on the property. It's optional, but generally recommended for homeowners. An Owner’s policy lasts as long as the property is in your possession, so it won’t need to be repurchased if you refinance your home.

###Lender’s Title Insurance

Lender’s Title Insurance is required in nearly all refinance and purchase transactions. As the name suggests, this policy protects the lender against losses incurred due to title disputes.

In a refinance transaction, the lender’s premium is typically paid by the borrower, but in some purchase transactions, the borrower may be responsible for the cost. The lender’s premium is dependent on the loan amount or purchase amount. So if either increase, the premium will likely follow suit. The cost of Lender’s Title Insurance also varies by location, and is strictly regulated on a state by state basis.

###Settlement Fee

Sometimes referred to the Closing Fee, the Settlement Fee covers costs associated with closing operations. Some title companies list out each cost, and some bucket them all in one place, so be sure you know exactly what you’re paying for. Costs bundled under the Settlement Fee may include the cost of escrow, survey fees, notary fees, deed prep fees, and search abstract fees.

###Search Abstract Fee

This fee is paid to a third party vendor to disclose historical information about the ownership of the property. It may appear as an individual item, or be included as part of the Settlement Fee.

###Survey Fee

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

###Notary Fee

The cost to get a notary to meet at a specified location for the closing and for sending the scanned copy and mailing the physical copy to the title company.

###Deed Prep Fee

A Deed Prep Fee is applicable when a title is transferred, or an existing deed has to be modified as part of a transaction. When a home is purchased, for example, the deed must be transferred title from the seller to the buyer. A deed may also be required when refinancing if marital status has changed, or people need to be added or removed from the title.

###Endorsement Fee

An Endorsement is a specific addition to the coverage that a lender may require beyond a standard policy. For example, if a structure was built near the property line, the policy may be expanded to cover the cost of relocating or rebuilding it in the event of a dispute.

###Recording Fee

Recording Fees are set by the county, not the title company, to cover the cost of entering deeds and mortgages into the land records.If a home is being purchased, these fees may also include transfer taxes and intangible taxes. It’s important to note that this is an estimate; if these fees end up being less than you were quoted, you will be reimbursed for the difference.

How much do title fees cost?

Title fees can vary significantly based on location, property value, and the complexity of the transaction.

How to spot “junk fees”

While most of the fees listed on your Loan Estimate are necessary for closing, it’s wise to keep an eye out for any padding that may have been added in. If you see any of the following fees, be sure to ask your lender what they mean, and why they’re necessary; they may not be legit.

• Application Fee
• Rate Lock Fee
• Loan Processing Fee
• Underwriting Fee
• Courier Fee
• Overnight Fee
  

Frequently Asked Questions

Question: Who pays the title fees at closing?

Answer: Who pays the title fees at closing depends on where you live. In some parts of the country, it’s customary for the seller to pay the buyer’s title insurance and the buyer to pay the owner the lender’s title insurance. The buyer also typically pays recording and title search fees. In others, it is the reverse.

Regardless of where in the county you are, who pays these fees can be negotiated and reflected in the purchase agreement.

Question: How much are title fees?

Answer: Title fees change from company to company and from location to location. They can also change depending on what’s included. In general, title fees are part of the closing costs, and usually cost 3-6% of the purchase price.

Question: Can I choose the title company?

Answer: Yes, buyers typically have the right to choose their title company, though recommendations can come from your real estate agent or lender.

Still have questions about title insurance or registration?

Better Settlement Services, an affiliate of Better Mortgage, has answers. Contact us at bss_support@better.com and we’d be happy to provide you with any information you need.