Texas · Title insurance

Texas title insurance rates: the same at every company

What title insurance is

Title insurance protects against a problem with the ownership of the house: an old lien nobody cleared, a missed heir, a forged deed. There are two policies. The lender's policy (the "loan policy" or "mortgagee policy") protects the lender for the loan amount and is required on nearly every mortgage. The owner's policy protects you for the purchase price and is optional, though almost everyone buys it on a purchase. On a refinance there is no new owner's policy; your old one still stands, and the lender needs a fresh loan policy because it is a new loan.

Why the premium is the same everywhere

Texas is one of a handful of states where the Department of Insurance (TDI) sets, or "promulgates," the price of title insurance and the wording of the policies. Every title company in the state charges the TDI rate for a policy of a given amount. The rate is a schedule by policy amount: a base amount for the first part of the coverage and a smaller step for each additional thousand dollars. TDI changes the schedule now and then, so the current figure is on TDI's site and on any title company's quote, and a quote from one company is the premium at all of them.

To give a sense of size without quoting a number that may be out of date: on a $380,000 policy the premium runs a bit over two thousand dollars (illustrative; check the current TDI schedule). The endorsements, the add-ons the lender may require on the loan policy, are also priced by TDI, most of them as a small fixed amount or a small percent of the premium.

The simultaneous-issue rate on a purchase

When the owner's policy and the loan policy are issued together on the same property at the same closing, TDI's rate rules charge the full premium for the owner's policy and a flat, nominal amount for the loan policy (the rules call it simultaneous issuance; it has long been $100). So on a Texas purchase the buyer's loan policy is nearly free when an owner's policy is bought. In much of Texas the seller customarily pays for the owner's policy, though that is negotiated in the contract and is not a rule.

One thing that confuses people: the federal rules behind the Loan Estimate require the lender's policy to be shown at its full stand-alone price and the owner's policy at the difference, not at the Texas simultaneous rate. So the Loan Estimate's title lines on a purchase can look out of step with the title company's quote. The total is right; the split between the two lines is a disclosure rule, not a Texas price. The Closing Disclosure shows it the same way.

What does vary between title companies

• The escrow or settlement fee. The title company's charge for running the closing. Set by each company, not by TDI. A few hundred dollars is common (illustrative).
• Document, courier, wire and e-recording fees. Small, and set by the company.
• The tax certificate. A report of the property's tax status, bought from a service. Small.
• The survey. Often arranged through the title company but done by a surveyor; see Closing costs in Texas for when an old survey can be reused.

On a refinance there is also a discount worth knowing about: when the home's last loan policy is less than eight years old, TDI's rule R-8 requires a credit against the new loan policy's premium (half the premium on the old balance within four years, a quarter after that). Lenders' estimates often leave it out, so check that the title company's quote shows it.

Reading the title lines on two Loan Estimates

Title charges sit on page 2 of the Loan Estimate, usually in Section C, "Services You Can Shop For," because you are allowed to pick the title company. (On the Loan Estimate they stay in C even if the lender suggests a company; on the Closing Disclosure they move to B if you used a company from the lender's list, and only stay in C if you picked your own.) Each lender fills those lines with its own estimate, and two lenders' estimates for the same closing can differ by hundreds of dollars for reasons that have nothing to do with the loan:

• one lender assumed a different title company's escrow fee;
• one included endorsements the other left off;
• one used an old premium schedule;
• one guessed at the survey and the other did not.

So when you line up two Texas Loan Estimates, do not let the title lines decide. The premium will be the same at closing whichever lender you choose, and the title company's own fees depend on the company, which you choose. The part of the price that is really the lender's is the rate and Section A. How to compare two Loan Estimates walks through it, and the Loan Estimate checker reads Section A for you.

Worked example (illustrative)

Lender 2's title lines look $400 cheaper, but they are guesses that will land in the same place. Lender 2's Section A is $1,405 higher, and that difference is real. Compare the lenders on the last row and the rate.

Questions people ask

Can I shop around for cheaper title insurance in Texas?

Not for the premium: the Texas Department of Insurance sets it, and every title company charges the same amount for the same policy. You can shop the title company's own fees, mainly the escrow or settlement fee and document fees, which are a few hundred dollars at most on a typical closing (illustrative).

Who pays for title insurance in Texas?

The buyer pays for the lender's policy on nearly every purchase loan. The owner's policy is negotiated in the contract; in much of Texas the seller customarily pays for it, but it is not a rule. On a refinance the borrower pays for the new lender's policy.

Why does my Loan Estimate show a big lender's title fee and a small owner's fee?

Federal disclosure rules require the lender's policy to be shown at its full stand-alone price and the owner's policy at the difference, instead of the Texas simultaneous-issue split, where the owner's policy carries the premium and the loan policy is a flat nominal amount. The total matches; the split is a disclosure rule.

Title premiums and endorsement prices are set by the Texas Department of Insurance and change from time to time; the dollar figures above are illustrative, not a quote. Figures are illustrative and are not a loan offer, approval, commitment to lend, or Loan Estimate. Your actual rates and fees depend on qualification with lenders. comparemyloan does not negotiate with lenders, lock rates, or take loan applications. This page is general information, not legal or tax advice.