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Application Fee:
Fee charged by lender to offset fixed costs related to mortgage loan
processing such as the credit report.
Closing Fee:
The fee charged by the closing agent who prepares the closing documents
and closes the loan on behalf of the lender.
Commitment Fee:
This is often called an origination fee and is generally computed at 1% of
the mortgage amount.
Discount Points:
Each point is equal to 1% of the mortgage amount. Points are used by the
lender to adjust the yield on the mortgage when it is sold to an
investor. By paying more points, the borrower can obtain a lower mortgage
interest rate.
Funding Fees:
Normally applicable on VA
loans only, equal to 1% of the loan amount. The fee is due at closing or
may be added to the loan amount and financed.
Homeowner’s
Insurance:
One year premium is
due in advance at time of closing.
Mortgage
Insurance: Insurance required
by the lender when the down payment is less than 20%. In the case of loan
default, this insurance reduces the lender's loss.
Pre-payables:
Adjustment to escrow accounts from the date of closing to the date of the
first payment. Interest is paid through the end of the month of closing,
taxes are paid through the end of the month of closing plus the following
month. 2 months of PMI are collected. 2 months of homeowners insurance
may be collected. A homeowners insurance policy must be provided along
with a receipt showing that the first year's premium is paid.
Recording Fees:
Fees charged by state or municipal entities for entering the closing
documents into the public record.
Survey Fee:
Is usually required and is used by the lender to check for encroachments
from within or from outside the subject property.
Title Insurance:
Provides protection for lenders and homeowners against financial loss
resulting from legal defects in the title.
Underwriting Fee:
Fee charged by the Lender to underwrite the loan. |
