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 Michigan 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 Insurance Costs in Michigan?
Title policies usually cost about 0.5% to 1.0% of the home’s purchase price and are included in michigan’s home closing costs. You will get an itemized breakdown of the title policy. A typical title insurance policy quote in Michigan 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 Michigan, the homebuyer is responsible for the title search, and it is usually done by a title company or an attorney. The costs of a title search in Michigan could reach $600, 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.
👉 Michigan Home Inspections: Find out more about home inspections in Michigan 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 Michigan generally ranges from $400 to $660.
Generally, the seller pays the title settlement fee in Michigan.
Lender’s Title Insurance:
A lender’s title insurance generally protects the mortgage lender financing your transaction from someone claiming a right to your house. It is issued for the loan amount given to the buyer, and as the debt reduces, so does the liability.
When purchasing a house using a mortgage or a loan, you will need a lender’s title policy in Michigan.
» Best Home Loan Lenders in Michigan: Check out all the top home mortgage lenders in MI.
Owner’s Title Insurance:
An owner’s title insurance policy secures the homebuyer’s transaction from real estate-related issues. Though purchasing a homeowner’s title policy isn’t compulsory, it is highly recommended to prevent any financial losses later on.
The seller usually pays for owner’s title insurance in Michigan. They have to pay a one-time fee, and its coverage lasts for as long as you or your heirs own the property.
Attorney Fee:
In Michigan, the law doesn’t require an attorney to oversee the real estate transaction or the title insurance process. However, having an attorney provides both parties with a safety net. They review contracts and other paperwork, including the title. The attorney fee is their remuneration for their services and is paid by the homeowner in most cases.
Real estate lawyers in Michigan usually charge an hourly fee from $250.
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 Michigan 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 fees range between $250-$350 in the state of Michigan.
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 Michigan, the standard costs are $15 for the first page and $3 for each additional page.
Understanding the Types of Title Insurance Policies in Michigan
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 Michigan?
The premium for an owner’s title policy in Michigan 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 Michigan, they are based on the house’s purchase price.
| Home Purchase Price | Title Policy Premium (per $1000) |
| $1,001- $50,000 | $ 5.20 |
| $50,001 – $100,000 | $ 4.20 |
| $100,001 – $200,000 | $ 3.67 |
| $200,001 – $300,000 | $ 3.15 |
| $300,001 – $1,000,000 | $ 2.62 |
| $1,000,000 and above | $ 2.10 |
You may even be eligible for a discount if you and the seller purchase the owner’s and lender’s title policies from the same company.
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 Michigan offers an enhanced owner’s title policy.
Who Pays Owner’s Title Insurance in Michigan?
When selling their house in Michigan, the seller usually pays for the homeowner’s title policy to make the deal more attractive. However, this is open to negotiation.
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 Michigan when purchasing a house using a mortgage.
How Much is Lender’s Title Insurance in Michigan?
The cost of a lender’s title policy in Michigan 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 Michigan?
The buyer has to purchase the lender’s title policy in Michigan to protect the mortgage broker’s interests in the transaction.
Who Picks the Title Insurance Company in Michigan?
In Michigan, the party that purchases the title policies decides which title company to opt for. This means that the seller generally chooses the title company. However, there are certain exceptions. Since the option for purchasing the title policy in Michigan is negotiable, the buyer can also pick the title company depending on the situation.
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 or the seller could end up paying inflated title insurance rates, thereby extending the expenses.
👉 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 Michigan | Owner’s Title Insurance in Michigan |
| 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 MI. | 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. |
| The buyer pays for lender’s title insurance. | Generally, the owner’s title insurance cost in the state of MI is borne by the seller. |
Average Cost of Title Insurance in Michigan
The median price of a home in Michigan is $236,981. Suppose the downpayment for the home is 20% (it ranges from 3% to 20%), then the title insurance costs in Michigan will be as follows:
| Title Fees | Amount |
| Title Search and Lender’s Title Insurance | $322.29 |
| Postage/Courier | $100 |
| Attorney, Closing, and Settlement Fees | $216.36 |
| Recording Fees | $230 |
| Owner’s Title Insurance | $710.0 |
» Buyer Closing Cost Calculator Michigan: Find out how much you have to pay for title insurance in Michigan.
Is Michigan’s Title Insurance Cost Negotiable?
Since a title policy quote in Michigan 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 Michigan is an area where there is scope for negotiation. The seller typically pays for the homeowner’s title policy in Michigan, while the buyer pays for the loan policy. But you may discuss with the seller and offload some of the other buyer title fees onto the seller.
👉 If the property is being sold again within a five-year period, the title costs may be waived completely. However, check with your title company before moving ahead with the transaction.
Alternative to Buying Title Insurance in Michigan: Warranty of Title
A warranty of title, also called a Michigan 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 Michigan. 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 Michigan Worth It?
Yes! Title fees help ensure that all the processes for the title transfer are done accurately, and title insurance is the largest cost you will have to bear among all the title fees in Michigan. Title insurance aims 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 Michigan, a lender’s policy is automatically included in the closing costs and is a non-negotiable purchase. However, 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 Michigan: Here are some of the other costs you may have to pay in Michigan.
Frequently Asked Questions
Also Read
- Michigan Real Estate Seller Closing Costs: Check out all the closing costs for a seller in MI.
- Best Time to Buy a House in Michigan: Want to buy a house in Michigan 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 Michigan with Bad Credit: Got a low credit score but want to buy a house in Michigan? This blog will help you out with all the answers.
- Michigan Seller Disclosure: The seller disclosure form is a standard checklist that reveals the seller’s knowledge about the MI property’s physical condition. Read this blog to know more.
- Who Pays Closing Costs When Selling a House in Michigan: Closing costs vary according to the type of real estate deal. Read to know more.
- Housing Market in Michigan: Venturing into real estate but not sure what to make of it? This blog will help you navigate MI’s real estate market.
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