Early-Issue Title Insurance is an additional title insurance premium required by lenders for borrowers who are taking out a new loan secured by a newly constructed home.
It is an insurance policy that protects you and the lender from any mechanics liens filed against the property after you close. The cost of the insurance is usually $2.00-$2.50 per $1,000 in the loan amount.
If the home purchase closes AFTER the lien waiver period is up, which is 75 days from the time the completion notice is filed with the local authority (i.e. county recorders office), then the need for this additional insurance policy can be waived.
How much is Early-Issue Title Insurance?
It depends on the title insurance company. At the time of this post, there were two formulas in use from two different providers:
Formula #1:
$2.00 per $1,000 borrowed- For a $200,000 loan the early-issue title insurance policy premium would be $400 ($2 * 200= $400).
Formula #2:
$1.00 per $1,000 for the first $100,000 then $2.00 per $1,000 for every $1,000 > $100,000.
Therefore, a $200,000 loan would require a $300 early-issue title insurance premium ($1 * 100 + $2 * 200= $300)