Which closing costs can you shop for?

Most buyers spend their energy comparing interest rates, then see thousands of dollars in closing costs on their Loan Estimate and assume they’re fixed. Some are. Others you have a legal right to shop for. Knowing which is which can save you hundreds, sometimes more.

How your Loan Estimate groups closing costs

Page 2 of every Loan Estimate splits loan costs into three sections. Our Loan Estimate guide walks through every line.

Section A is the most important line to compare between lenders. Two lenders can quote the same rate with very different origination charges, so compare Loan Estimates side by side on the same day.

What you can shop for

• Title insurance and settlement services. The title company searches public records, insures the title, and usually runs the closing. Fees vary between companies.
• Survey. If your lender requires one, you can often choose the surveyor, and a recent survey from the seller may be accepted.
• Pest or other inspections the lender requires.
• Homeowners insurance. It shows up as a prepaid cost, not in Section C, but you choose the insurer, and premiums can differ by hundreds of dollars a year for the same coverage.

The trade-off: tolerances

Federal rules limit how much costs can rise between your Loan Estimate and your Closing Disclosure:

• Can’t increase at all: the lender’s own charges (Section A) and services you couldn’t shop for (Section B).
• Can increase up to 10% in total: recording fees and shoppable services when you pick a provider from the lender’s list.
• No limit: shoppable services when you choose a provider that isn’t on the lender’s list, plus prepaid items like insurance and interest.

So if you pick your own title company, get its fee quote in writing, because the 10% protection no longer applies to those fees. Compare against your Closing Disclosure when it arrives, at least three business days before closing.

Title insurance in Texas

Texas works differently from most states. The Texas Department of Insurance sets title insurance premiums, so every title company charges the same premium for the same policy. What you can compare is everything around it:

• Escrow or settlement fees
• Tax certificates, courier, e-recording and document fees
• Some endorsement and miscellaneous charges

In much of Texas the seller customarily pays for the owner’s title policy, and the buyer pays for the lender’s policy, but it’s negotiable, so check your contract. Our title and closing cost calculator shows the state-set premium for your price and loan amount, and our title guide explains the two policies.

A five-minute closing cost checklist

1. Get Loan Estimates from at least two or three lenders on the same day and compare Section A.
2. Ask each title or escrow company for a written quote on fees outside the premium.
3. Shop your homeowners insurance before you’re under contract.
4. Ask the seller whether they have a recent survey your lender might accept.
5. When your Closing Disclosure arrives, compare it line by line with your final Loan Estimate.