Buying a new home is a significant investment, and it is only natural that you want to protect yourself from any future vulnerabilities. Title policies help you do just that. But how much is title insurance in Iowa going to cost you? Let’s find out!
What is Title Insurance?
A title policy safeguards the interests of both the homeowner and the lender in cases of issues associated with the house’s title, including:
- Liens or lawsuits
- Forgery
- Encroachment
- Undisclosed heirs
- Errors in deeds
What are the Title Costs in Iowa?
Title policies usually cost about 0.5% to 1.0% of the home’s purchase price and are included in your Iowa home’s closing costs. A typical title insurance policy quote in Iowa will include the following title fees:
Title Search Fee:
A title search helps verify that the seller is the legal owner of the property being sold. It also ensures that the house has a clean title, i.e., it has no outstanding secured debts, liens or lawsuits, undisclosed heirs, etc. This is essential to protect the new homeowner from future monetary or ownership disputes related to the title.
In Iowa, the title search is usually done by a title company or an attorney. The cost of a title search in Iowa ranges from $200 to $400, depending on the type of property.
A title search is often mistaken for a home inspection. While the latter focuses on structural damages to a home, a title search is only concerned with the legal aspects of the property.
👉 Iowa Home Inspections: Find out more about home inspections in Iowa here.
Title Settlement Fee:
A title settlement fee is paid to the title company that acts as the settlement agent at closing. It covers the administrative cost of closing and is separate from the net property value. This fee includes escrow fees, land survey fees, notary fees, deed preparation fees, etc. The title settlement fee in Iowa differs from company to company.
Attorney Fee:
In Iowa, the law requires an attorney to oversee the real estate transaction. They review contracts and other paperwork, and the attorney fee is their remuneration for their services.
Real estate attorneys generally charge an hourly fee of around $300.
Abstract and Recording Fee:
The title abstract is a legal record of a property’s title history. It includes information about past title transfers, liens, and legal actions against the property. One of the key steps to buying a house in Iowa is obtaining the property’s abstract. It is a crucial document for buyers to ensure a clear title for the house they are about to purchase. It is issued by an abstraction.
The abstract fee can go up to $400.
Recording refers to the registration of the change in ownership of a house or the sale of a property in the public record. It also records mortgages and other liens against the home.
The county usually charges the recording fee. In Iowa, it costs approximately $7 for the first page and $5 for every subsequent page.
Title Opinion:
In Iowa, when you purchase a property, an attorney will provide you with a title opinion, which is based on the abstract of the house. This title opinion functions similarly to a title search. Here, the attorney informs you if the house has a clear title or possesses any defects. It also mentions if there are any limitations associated with the property that you should be aware of.
The cost of title opinions differs from case to case. However, they typically cost $135 for residential properties.
Understanding the Types of Title Insurance Policies in Iowa
Title policies are of two types: owner’s title insurance and lender’s title insurance.
1. Owner’s Title Insurance
Homeowner’s title policy helps protect the buyer from future vulnerabilities that may befall them due to a defective title. It covers problems like:
- Third-party claims to the title
- Pre-policy fraud
- An unmarketable title
- Liens
- Building permit violations
- Post-policy forgery
If someone raises a claim to the property, the title insurer will bear the costs of legal representation. Further, they will reimburse the required amount up to the policy limit in case any damages are awarded in the lawsuit.
How Much is Owner’s Title Insurance in Iowa?
The premium for an owner’s title policy in Iowa is paid just once. However, certain factors determine its cost:
- Government regulations
- The title company
- The coverage chosen
While the government does not firmly lay down the title insurance rates in Iowa, they are based on the house’s purchase price. Since you have the luxury of shopping around for a policy, you may find one that suits your needs without being heavy on your pocket.
The estimated costs title insurers charge are as follows:
| Home Purchase Price | Title Policy Premium (per $1000) |
| $50,001 – $100,000 | $ 3.75 |
| $100,001 – $150,000 | $ 3.25 |
| $150,001 – $250,000 | $ 2.50 |
| $500,001 – $1,000,000 | $ 2.00 |
| $1,000,000 and above | $ 1.75 |
You may even be eligible for a discount if you purchase the owner’s and lender’s title policies from the same company. Moreover, you can get almost a 40% “re-issue rate” discount if you renew the owner’s title policy purchased by the seller. However, the seller must provide the policy document for this to be applicable.
Owner’s title insurance offers two coverages, standard and enhanced. While the standard policy does provide sufficient security to the new homeowner, enhanced title insurance protects against any post-closing vulnerabilities. It typically costs 20% more than a standard owner’s title policy.
👉 Remember to check if your title company in Iowa offers an enhanced owner’s title policy.
Who Pays Owner’s Title Insurance in Iowa?
In Iowa, there is no fixed regulation regarding who buys an owner’s title policy. While the prevalent practice is that the seller purchases it, it is negotiable.
2. Lender’s Title Insurance
A lender’s title insurance is taken on when you purchase a house either via a mortgage or a loan. Hence, it is also known as a loan policy. It protects the lender’s investment should an ownership dispute arise in the future.
A lender’s title policy is required in Iowa when purchasing a house using a mortgage.
» Best Home Loan Lenders in Iowa: Check out all the top home mortgage lenders in Iowa.
How Much is Lender’s Title Insurance in Iowa?
The cost of a lender’s title policy in Iowa is usually equal to the amount the loan is issued for. So, the accountability of the title insurer decreases as the loan is paid off.
Who Pays Lender’s Title Insurance in Iowa?
The buyer has to purchase the lender’s title policy in Iowa to protect the mortgage broker’s interests in the transaction.
Who Picks the Title Insurance Company in Iowa?
In Iowa, generally, the party that purchases the policies decides which title company to opt for. However, in some areas, the buyer can even select the company irrespective of who pays for the title insurance policy.
Sometimes, the lender or the real estate agent may also provide suggestions for title companies with which they may have tie-ups. They could be getting kickbacks in return for bringing them clients. Consequently, you could end up paying inflated title insurance rates, thereby extending the expenses and increasing your stress.
👉 Remember to thoroughly vet the title company or attorney you choose to save money and maintain peace of mind.
Lender’s Title Insurance vs. Owner’s Title Insurance
| Lender’s Title Insurance in Iowa | Owner’s Title Insurance in Iowa |
| Lender’s policy protects the lender’s interests in the real estate transaction. | Owner’s title insurance looks after the buyer and protects their investment from title defects. |
| The loan amount is what determines the lender’s title insurance fee in Iowa. | The policy has a one-time fee paid at closing. There are two coverage options, standard and extended. |
| As the loan is paid back, the liability reduces. | The policy lasts for as long as the buyer or his heirs own the property. |
| Lender’s title insurance is mandatory. | Owner’s title insurance is optional but recommended. |
| Generally, the buyer pays for lender’s title insurance. | Generally, the owner’s title insurance cost in the state of Iowa is borne by the seller. |
Average Cost of Title Insurance in Iowa
The median price of a home in Iowa is $199,882. Suppose the downpayment for the home is 20% (it ranges from 3% to 20%), then the title insurance costs in Iowa will be as follows:
| Title Fees | Amount |
| Title Search and Lender’s Title Insurance | $0 |
| Postage/Courier | $100 |
| Attorney, Closing, and Settlement Fees | $242.46 |
| Recording Fees | $230 |
| Owner’s Title Insurance | $102.54 |
» Buyer Closing Cost Calculator Iowa: Find out how much you have to pay for title insurance in Iowa.
Is Iowa‘s Title Insurance Cost Negotiable?
Since a title insurance quote includes several fees, there is very little wiggle room for negotiation in its prices. Aspects like lawyers’ title fees, cost of title transfer, title search cost, etc., may change based on the process and individual being dealt with.
Who pays for title insurance in Iowa is another area where you can negotiate. The seller pays for the owner’s title policy in most areas of Iowa, while the buyer pays for lender’s insurance. However, you can discuss it with the seller and come to a different arrangement.
The real estate contract will state the party/parties responsible for paying the title insurance premium.
Alternative to Buying Title Insurance in Iowa: Warranty of Title
A warranty of title, also called an Iowa General Warranty Deed, is a legal document where the seller guarantees that they can transfer ownership of the property to the buyer. It also states that no one else has any claim to the house. Thus, it protects the buyer’s interests, allowing them to sue the seller should any dispute arise in the future.
A warranty of title doesn’t provide as much financial protection as a title policy in Iowa. But, if you are unable to buy a homeowner’s title policy at the time of closing, this document may protect you from threats like:
- Unresolved inheritance issues
- Boundary-line disputes or survey inconsistencies
- Undisclosed mortgages
- Outstanding property or federal income taxes
Are Title Costs in Iowa Worth It?
Yes! Title fees help ensure that all the processes for the title transfer are done accurately. In Iowa, title insurance is the largest cost you will have to bear among all the title fees.
The purpose of title insurance is to protect against future problems like disputes in ownership, any outstanding liens from the previous owner, encroachment, etc.
With an insured title, you won’t have to spend on legal fees or pay back taxes, saving you money in the long run. All for just a one-time fee! On the other hand, without a title policy, you risk losing your home to the complainant.
In Iowa, a lender’s policy is automatically included in the closing costs and is a non-negotiable purchase. But keep in mind that this policy only extends its coverage to the lender. You need a separate homeowner’s title policy to protect yourself from title defects.
👉 Closing Costs for Buyers in Iowa: Here are some of the other costs you may have to pay in Iowa.
Frequently Asked Questions
What are title fees in Iowa?
Title fees are a part of closing costs. They include the charges for carrying out the title search of the property, attorney and notary services, settlement fees, etc. If you want to know how much you will need to pay as closing costs in Iowa, use Houzeo's closing cost calculator.
How much does title insurance cost in Iowa?
When bought together, the lender's title and owner's title policies usually cost about 0.5% to 1.0% of the home's purchase price in Iowa. The premium rate is based on the location of the property and the mortgage amount.
How much is title insurance for land in Iowa?
When buying a plot of land in Iowa, you should also acquire an owner's title policy to protect your investment. It is a one-time fee ranging from 0.5% to 1% of the purchase price.
Also Read
- Iowa Real Estate Seller Closing Costs: Check out all the closing costs for a seller in Iowa.
- Best Time to Buy a House in Iowa: Want to buy a house in Iowa and wondering when you should take the plunge? Read this blog to understand the best time to check out the real estate market.
- Buying a Home in Iowa with Bad Credit: Got a low credit score but want to buy a house in Iowa? This blog will help you out with all the answers.
- Iowa Seller Disclosure: The seller disclosure form is a standard checklist that reveals the seller’s knowledge about the Iowa property’s physical condition. Read this blog to know more.
- Who Pays Closing Costs When Selling a House in Iowa: Closing costs vary according to the type of real estate deal. Read to know more.
- Housing Market in Iowa: Venturing into real estate but not sure what to make of it? This blog will help you navigate Iowa’s real estate market.
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