Understanding Typical Fees and Charges
Good Faith Estimate
good faith estimate is an estimate prepared by a lender for the costs
associated with a particular loan package. It includes a loan type, loan
amount, down payment amount, an interest rate, information about
projected monthly payments, and a detailed list of all the expenses you
will be charged at closing. A Good Faith Estimate is just an estimate
and does not commit either the lender or the homebuyer to the terms, but
it is a helpful tool in comparing loan possibilities and projecting
expenses. The expenses commonly listed on a Good Faith Estimate are
fees are fees charged by the mortgage company for handling the loan.
Typical origination fees range from zero to one percent of the amount of
money you borrow. For example, if you borrow $100,000, you may expect
to pay up to $1,000 at closing for the origination fee.
points are sometimes paid by the homebuyer to obtain an interest rate
lower than the typical rate that is being offered at that time. Each
discount point purchased costs the homebuyer one percent of the amount
of money borrowed, and usually reduces the interest rate by ¼ of one
percent, although that can vary due to market conditions. For example,
on a $100,000 loan, paying one discount point would cost $1,000, and
might reduce an interest rate of 6.5 percent to 6.25 percent. The longer
you own the home and make payments, the more this lower rate will
benefit you. It typically takes from three to six years for each point
purchased to pay for itself in interest savings. Some loan packages do
not include discount points, and very few include more than one discount
point. When comparing interest rates, check to see if you are being
asked to pay any discounts points to get the quoted rate.
order to establish the value of the property, the lender will have a
professional appraisal done, and the fee will be charged to the
homebuyer at closing. Typical appraisal fees can cost up to $300, and
sometimes these fees are requested in advance as part of an application
Credit Reporting Fee
approving your loan application, the lender will check your credit
through professional agencies. The costs for these services are charged
to the homebuyer at closing, and usually cost up to $50 per applicant.
fees are charged by the lender at closing to cover the costs of having
your mortgage and property deed accepted, or recorded, by the
appropriate local government office. These fees usually cost up to $45.
Settlement Fees or Attorney Fees
fees or attorney fees are charged to the homebuyer at closing for the
services of the attorney who prepares the legal documents for the
property transfer and performs the closing. Typical fees charged to the
homebuyer range up to $400.
insurance is usually required by the lender as protection against any
future legal issues about the seller's right to sell the property to you
without any debts or obligations attached to the property. Typical
charges are $3 for every $1,000 borrowed, so on a $100,000 loan a charge
of $300 would be typical. Make sure and ask us about Owner's Title
certification is required by the lender to pay a professional agency to
examine federal floodplain maps and compare them to the location of the
property. They will then decide if flood insurance should be required.
The charges to the borrower at closing for this service range up to $20,
and do not include the cost of any flood insurance that may be required
by the lender.
Tax Service Fees
Tax service fees may cost the homebuyer up to $75 at closing to cover costs associated with updating property tax records.
lender will pay a professional surveyor to visit the property and
confirm that the house is located entirely on the land being sold, and
that no structures like fences or outbuildings that belong to a neighbor
are positioned on the property. This usually costs the borrower up to
$150, and will cost more money if the homebuyer has requested that the
property boundaries be marked with stakes.
an FHA loan, the lender will require that the homebuyer pay a
commitment fee at closing. This usually costs up to $300. This fee is
not charged on a VA loan or a conventional loan.
lender will probably charge a service fee of up to $200 for services
involved in the process of determining how much money you are eligible
Courier fees of up to $30 may be charged to the homebuyer at closing for the delivery of documents or checks.
Final Inspection Fees
inspection fees of up to $75 may be charged to the homebuyer at closing
to pay for having a professional visit the property on behalf of the
mortgage company to assure that construction has been completed in a
manner that makes the property sufficient collateral for the loan. This
should not be confused with a home inspection, which homebuyers
sometimes arrange to get the opinion of a professional on the condition
of the property.
Automated Underwriting Fees
underwriting fees of up to $35 may be charged to the homebuyer at
closing to cover processing costs if the lender uses a computer program
or service to help in determining how much money you may be eligible to
may also be required to pay a certain amount of property taxes and
homeowners' insurance premiums in advance on the day of your closing.
These costs vary according to property tax rates, the date when taxes
will be due, and on the cost of a typical homeowners' insurance policy.
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