Most Houston buyers assume title insurance is one expensive line item. It is actually two policies, and Texas custom has the seller paying for the bigger one. See exactly what lands on your side of the closing statement.
The Agency Team walks Houston buyers through an itemized closing cost estimate before an offer is written. Broker Waldina Galeano, TREC Broker License #665052, $550 million sold in three years, more than 1,000 Houston families served annually.
A Houston buyer's lender title policy costs a flat $100 when issued alongside the seller's owner policy at the same closing, under the state's Rate Rule R-5, a small fraction of what that same coverage would cost purchased alone.
By Texas custom in most counties, the seller pays for the buyer's owner title policy and the buyer pays for the lender's policy, though both are negotiable line items in the contract, not fixed rules. Total buyer side closing costs in Texas commonly run 2 to 5 percent of the purchase price, not counting the down payment.
When a lender's title policy is issued alongside the seller's owner policy at the same closing, Texas Rate Rule R-5 sets the lender policy premium at a flat $100, regardless of loan size, as long as the loan does not exceed the sale price. Purchased alone, that same coverage would cost far more.
A standard residential appraisal in the Houston area typically runs $400 to $650, paid directly to the appraiser through the lender, not to The Agency Team or the seller.
The option fee, commonly $100 to $200, buys the right to walk away for any reason during the option period. It goes directly to the seller, not into escrow, and it is separate from earnest money.
Earnest money typically runs 1 to 2 percent of the purchase price and gets deposited with the title company. It is fully refundable if you terminate during the option period or under a contract contingency that protects you, such as financing or appraisal.
Lenders collect several months of property tax and insurance into an escrow reserve at closing. The size of that reserve depends on your closing date and the tax entity stack covering the address, which is why two buyers closing on the same street in different months see different numbers.
An itemized estimate should exist before an offer goes out, not after. These are the 5 checks that happen first.
Each path carries a different closing cost picture. Knowing which one you are in changes what you should negotiate for.
| Financed Purchase | Cash Purchase | New Construction | |
|---|---|---|---|
| What it is | A standard mortgage purchase, appraisal and underwriting included. | No lender involved, so no appraisal requirement and no lender title policy step. | A new home purchase where the builder's preferred lender often contributes to closing costs. |
| Typical closing costs | Lender title policy $100, appraisal $400 to $650, plus prepaids and lender fees, commonly 2 to 5 percent of the price total. | No appraisal fee and no lender title policy. Owner title policy, survey and prorated taxes still apply. | Often reduced through a builder incentive, sometimes $5,000 to $15,000 toward closing costs, tied to using the builder's preferred lender. |
| Time to close | 30 to 45 days from contract to funding. | 10 to 14 days, since there is no underwriting to wait on. | Set by the builder's construction schedule, often months, not days. |
| Negotiating leverage | Can ask for seller concessions toward closing costs, capped by the loan program. | Strongest negotiating position on price, since the seller carries no financing risk. | Incentives are set by the builder, not negotiated the way a resale price is. |
| Best for | Most buyers, since financing preserves cash for the down payment and reserves. | Buyers who want speed and negotiating power and have the funds available. | Buyers who want a new home and are comparing the builder's lender against an independent one first. |
Touring a new construction community first, before registering with a builder directly, matters: most builders only honor buyer representation when it is established at the first visit. More on that in New Construction and Builder Contracts.
Earnest money is fully refundable if you terminate during the option period, for any reason, or if a contract contingency protects you, most commonly the financing contingency or an appraisal that comes in low. It stops being automatically refundable once the option period ends and no contingency applies, which is why the option period matters more than most first time buyers realize. Waiving it entirely to compete on a multiple offer property is a real risk, not a formality, and should be a decision you make with full information, not a default.
Waldina Galeano reviews the exact contingency language with every buyer before a contract is signed, not after earnest money is already at risk.
A financed buyer applies with a lender, who is required by federal law to send a Loan Estimate itemizing costs within 3 business days.
The option fee is paid directly to the seller, and inspections happen during this window. Repair requests or a walk away decision both come out of it.
The lender orders the appraisal. If no current survey exists, a new one is ordered here, or a T-47 affidavit is signed if the seller's existing survey still applies.
Underwriting finishes, the title company prepares the closing disclosure, and funds transfer at closing. Most financed Houston purchases close 30 to 45 days after contract. Cash purchases typically close in 10 to 14 days.
Buyers get surprised by two things almost every time: that the seller usually pays for their owner title policy, and that their own lender policy is a flat $100, not a percentage of the loan. I would rather a buyer hear both of those from me before an offer, not from a closing disclosure the night before signing.
Waldina Galeano, Broker and CEO, The Agency Team, TREC Broker License #665052
A financed Houston buyer typically pays a $100 lender title policy under Rate Rule R-5, a $400 to $650 appraisal fee, an option fee of $100 to $200 paid directly to the seller, earnest money of 1 to 2 percent of the price, and a prepaid escrow reserve for taxes and insurance. Combined, buyer side closing costs in Texas commonly run 2 to 5 percent of the purchase price, not counting the down payment. Broker Waldina Galeano, TREC Broker License #665052, walks every buyer through an itemized estimate before an offer is written, not after.
Buyers pay for the lender's title policy, which protects the lender, not the buyer's equity. By Texas custom the seller pays for the buyer's owner policy, which protects the buyer's ownership itself, though both are negotiable in the contract. When both policies are issued at the same closing, Rate Rule R-5 sets the lender policy at a flat $100 no matter the loan size, a small fraction of what it would cost purchased on its own.
The option fee is commonly $100 to $200 in the Houston area, paid directly to the seller for the right to walk away for any reason during the option period. Earnest money is separate, typically 1 to 2 percent of the purchase price, held by the title company and fully refundable if you terminate during the option period or under a financing or appraisal contingency. Waldina Galeano confirms both numbers in writing before you sign, since sellers set the option fee and it varies by contract.
A survey shows the boundaries, improvements and any encroachments on the lot, and title companies require a current one before insuring the property without exception. If the seller already has a survey and nothing on the lot has changed, a T-47 Residential Real Property Affidavit lets the title company rely on the existing survey at no new cost. If no survey exists, a new one typically runs $400 to $600, and who pays is negotiable in the contract.
Yes, seller paid concessions toward a buyer's closing costs are common and are capped by the buyer's loan program: 6 percent of the price on an FHA loan, and 3 to 9 percent on a conventional loan depending on the down payment, per Fannie Mae guidelines. Whether asking for it makes sense depends on how many competing offers the seller is fielding. The Agency Team, TREC Broker License #665052, checks live competing inventory before advising a buyer on how aggressively to ask.
Financed purchases typically close 30 to 45 days after the contract is signed, covering the option period, the appraisal and underwriting. Cash purchases, with no financing contingency, typically close in 10 to 14 days. Waldina Galeano tracks every deadline in the contract, the option period, the financing contingency date and the closing date, so a buyer never misses one by accident.
Tell us the price range you are watching and we will come back with an itemized closing cost estimate, before you write an offer.