JosephFeng.com, Joseph Feng

800. Fees/Charges That Can Be Payable In Connection With A Mortgage Loan:

801. Loan Origination Fee: Also known as points, they are charged by the lender and/or broker. An option for the home buyer is to pay points to lower the interest rate. Expressed as a percentage of the loan, each point is equal to 1% of the loan amount; for example: on a $150,000 loan, 1 point would equal $1,500 and varies with the interest rate, i.e. the lower the rate, the higher the points.

802. Loan Discount: Also know as discount points and also expressed as a percentage of the loan. Charged by the lender broker to buy the rate down.

803. Appraisal Fee: Charged by the appraiser for the evaluation and inspection of the property. The appraisal fee is due and payable to the appraiser at the time of the inspection.

804. Credit Report: Charge by the broker and/or the lender for the credit report used to determine credit worthiness.

808. Mortgage Broker Fee: Same as points but can be expressed as a flat fee.

809. Tax Related Service Fee: Charged by lender for notification as to when your taxes are due and payable or delinquent.

810. Processing Fees: Charged by the lender and/or broker for processing the loan and administration charges.

811. Underwriting Fees: Charged by lender and/or broker for under-writing, evaluating and documenting the loan package.

812. Wire Transfer Fee: Charged by lender to wire funds to escrow company for disbursement.

Misc. Courier Fee: Charged by lender, broker, and/or Title Company to transport or overnight legal documents.

Misc. Flood Cert: Fee collected by lender for flood zone determination.

Misc. Commitment Fee: Charged by lender and/or broker for providing a loan commitment.

Misc. Lock-In Fee: Charged by lender and/or broker for locking the loan.

Misc. Escrow/Impound Waiver Fee: Charged by lender and/or broker for waiving the escrow/impound account.

1100. TITLE CHARGES:

1101. Settlement/Closing or Escrow Fee: Charged by escrow/title company or settlement agent to handle the money in escrow.

1105. Document Preparation Fee: Charged by lender to prepare the legal documents for title/escrow.

1106. Notary Fees: Charged by title company to notarize your signatures on the legal documents.

1108. Title Insurance: The title insurance policy protects both the buyer and lender by insuring a clear chain of title. (In other words, it insures that that the person who sells the house has the legal right to do so.) Charged by the title company for research and preparation of the title report and for providing title insurance. The lender requires title insurance and title must be re-researched and a new title insurance policy issued for a refinance.

Misc. Endorsements: Charged by title company, but required by the lender. Endorsements include 8.1 (environmental) endorsement, PUD and ARM endorsements.

Misc. Reconveyance Fee: Charged by title company and/or current lender to release current mortgage lien on property.

Misc. E-Doc Fee: Charged by title company and/or current lender to email the final loan documents to title for signing.

1200. GOVERNMENT RECORDING & TRANSFER CHARGES:

1201. Recording Fee: Charged by title company to record the new Deed of Trust (mortgage) with the county recorder's office.

Misc. Transfer Taxes: This is the cost for transferring ownership of the property. The fee is often calculated as a percentage of the sales price.

1300. ADDITIONAL SETTLEMENT CHARGES:

1301. Pest Inspection: Charge for pest inspection if required by lender or purchase contract.

Misc. Inspections: Charge for other inspections (home, roof, well, septic, etc.) if required by lender or purchase contract.

Closing costs do not include prepaid items or reserves. Prepaid items and reserves are included in the settlement charges.

Prepaid Items and Reserves (impounds) are not listed as closing costs, but are expenses that you may incur in connection with the loan. These are included in the total settlement charges and are:

900. ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE:

901. Interest per day: Interest due the lender for each day's interest accrued after the loan funds and until the first payment is due. For example: If the loan funds on May 15 and if your first payment is due July 1, you will owe interest from May 15 to May 31. July’s payment will cover June’s interest.

902. Mortgage Insurance Premium (PMI): Insurance required for when the borrower's down payment on the house is less than 20% of the purchase price or the equity is less than 20% on a refinance.

903. Hazard Insurance Premium: Purchases require 1 full year to be paid in advance out of escrow.

1000. RESERVES DEPOSITED WITH LENDER:

1001. Hazard Insurance Premiums: This insurance covers replacement costs for damages caused by fire, wind or other disaster that might affect the value of the property. Typically, the insurance also includes personal liability and theft coverage. Usually collected by the escrow company and then impounded by the lender. Purchases require 2 months while refinances require a 5-month balance on your current policy from the day of funding.

1004. Taxes and Assessment Reserves: Usually collected by the escrow company and then impounded by the lender. Property taxes are often prorated between the buyer and seller for a purchase. A refinance requires enough money to be in the impound/escrow account to cover the property tax payment when it is due. Many Lenders also require a buffer of two months in case taxes go up.

1005. Flood/Quake Insurance Reserves: Additional hazard insurance coverage that is required for homes located in a designated hazard zone as established by FEMA. The Lender will determine if the additional insurance is required.

With a home purchase, a payment to escrow at closing may be required. For a refinance, the Prepaid Items and Reserves (impounds) may be financed into the loan amount to avoid an out-of-pocket expense.

COMPENSATION TO BROKER (Not Paid Out of Loan Proceeds)

Broker Premium: Also know as Yield Spread, Yield Premium, etc. Compensation paid outside of closing to the broker by the lender. This is not a dollar charge to you but is paid through the interest rate.

How to Read Good Faith Estimate