The Texas Department of Insurance sets the premium Charge for the Loan Policy. Premiums are nonnegotiable. Other charges, such as recording costs, tax search or certificates, and escrow fees are not promulgated or included in the premium charge. The basic premium for a Loan Policy is the same as the basic premium for an Owner’s Policy. If a Loan Policy is issued simultaneously with the Owner Policy and does not exceed the amount of the Owner Policy, the premium for the “simultaneous” Loan Policy is greatly reduced.
The seller customarily pays for issuance of a buyer’s Owner’s Policy, and the buyer customarily pays for issuance of the Loan Policy. Some builders agree to pay only for the Loan Policy, and the buyer may pay for the additional cost of the Owner’s Policy.
If a lender refinances a loan insured by a prior Loan Policy issued by any prior title company within the last 7 years, the new Loan Policy issued by any title company must be issued at a reduced rate. A refinance of a construction loan covered by a prior Loan Policy must be issued for the minimum promulgated premium, if the new Loan Policy does not exceed the prior Loan Policy. If two prior mortgages are refinanced by one new mortgage, or one prior mortgage is refinanced by two new mortgages, many title companies will give the refinance credit (of 15-40%) on the new Loan Policy Amount of Insurance. The amount of the Loan Policy must be the loan amount or value of the land where the land represents only part of the collateral for the loan.
If the mortgage may include additional capitalized interest or if the lender otherwise requests, the policy may be issued for up to 125% of the original loan amount. There is no additional charge for this extra coverage if the amount of the Loan Policy does not exceed the amount of the Owner’s Policy.