Estimated fees and costs
Shortly after submitting your loan application you will receive a Good Faith Estimate (GFE) from your lender. This will reveal the estimated fees and closing costs you can expect to pay when closing your loan. These typically include:
Before approving your loan, your lender may need to obtain a home appraisal to determine the estimated market value of the property. Your lender will take the appraised value into consideration when determining your mortgage eligibility. If the cost of your home appraisal isn't included in your loan application fee, you may be required to pay this separately
Credit report fee
When you apply for your loan, lenders will usually look at your credit score from each of the three major credit agencies: Equifax, Experian and TransUnion. The charge for the credit report is often included as part of the application fee
You can choose to pay discount points in exchange for a lower interest rate on a loan. One point is equal to 1% of the loan amount. Discount points are usually collected in cash at closing as part of the closing costs the borrower is responsible for.
Flood certification fee
Before approving your loan, a lender will need to find out whether the home is in a flood hazard area. If it is in a flood hazard area, flood insurance will be required in addition to your homeowners insurance.
Lenders may charge a fee known as an origination fee to cover the costs of processing your mortgage application. This fee may be collected upfront or as part of the closing costs paid by the borrower at closing.
Owner’s title insurance
In addition to lender required title insurance, property owners can obtain title insurance to protect against any disputes that may arise regarding ownership of the property, including fraudulent claims against ownership, liens, and undisclosed heirs, as well as certain boundary disputes.
As part of the mortgage lending process, you will give the lender a mortgage on the property. The mortgage is recorded in the public records and provides notice of the transaction to other interested parties. The recording fee varies depending upon the county the property is located and is based upon the number of pages being recorded.
A settlement fee is charged by the title company or escrow company who conducts the mortgage closing. The mortgage closing is when you sign the mortgage loan documents, enabling the mortgage to be recorded and loan funds paid on your behalf.
Tax service fee
Your lender may use a tax service agency to monitor the payment of your property tax bills. The purpose of this is to ensure that the payments are made on time, and to prevent tax liens from occurring. The tax service fee covers the cost of this service.
Lenders require title insurance on the property to protect against adverse claims to the lender's mortgage interest in the property. This fee is part of the borrower's closing costs and is collected at closing.
In some states, you may be required to pay a transfer tax when you purchase a property. The state will often tax the transfer of legal deeds, or a change of title, with the Land Title Office. The amount of this fee and who pays it
Copyright 2013. Rick Plutchak. All rights reserved.
Equal Housing Lender. This financing is designed to assist you in selecting the loan program that most closely suits your budget. Financing is shown for comparison only. This is not an offer of credit or commitment to lend. Loans are subject to buyer/property qualification. Rates/fees are subject to change without notice. Cash reserves may be required for some conventional loans. DRE License #01259412 NMLS #333242.
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