Question:

What is the effect of title insurance rules and regulations on title insurance cost?

Answer:

Title insurance rules and regulations vary by state. Some states determine the title  insurance and search costs; others only set title insurance  policy cost; yet the rest allow title companies to determine their own title search policy and services costs and.

Statistics shows that a $200,000 title insurance coverage (policy only, no search) may cost over $1500 in Texas - a state that regulates title insurance policy cost, and only over $800 in California. Another interesting fact is that in Iowa state title insurance premiums are illegal. Title insurance costs (policy and search) may be less than $500 on a half-million dollar property, compared to 2-3 times more expensive title insurance and services costs in some other states.

As you can see, title charges are regulated differently.

  1. If your state doesn't regulate title insurance costs, you could try saving some cash selecting a title company on your own rather than using the title company offered by the lender.

    Borrowers should be advised that it is illegal to have a lender force you to accept a title insurer of their choice. Lenders can only recommend a third party mortgage service provider such as title and mortgage insurance companies.

  2. If the state regulates the title policy premiums it may not pay to shop as every title insurer will be charging similar costs. Have in mind that most US states do have their own rules and regulate title premium costs.
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