Mortgage Network Solutions: CLOSING COSTS 101

A one time only fee, point(s), by Lender to buy down the interest rate to get a lower rate than a no points rate. . Each point is equal to 1% of the loan amount.

Payment to an appraiser to research and assess the market value of the property on which a mortgage is being placed. The appraisal is required in order to determine the security of the loan and the borrower's Loan to Value (LTV) ratio. Appraisals cost $450-$525 depending upon your local market. Investment property appraisals cost an extra $100-$200 due to the extra forms required on investment appraisals. A FHA appraisal cost ranges from $460-$550.

This fee is charged by a credit service agency to provide the lender with a report detailing a borrower's credit history. We require an independent credit report, so we cannot reuse any prior credit reports you may have. The initial standard Credit Report will cost approximately $25-30 per person.

A fee the Lender charges if they require an independent inspection of the property. Not a very commonly seen fee.

Fee a Mortgage Broker can charge for originating the loan. Each point is equal to 1% of the mortgage amount. The amount may be a percentage of a percent as well. Many Brokers are paid by the Lender they submit the loan to and not the borrower, therefore they do not charge a broker fee.

The lender requires research of the records of the Registry of Deeds for the county in which the property lies. Each property is reviewed to confirm that the taxes are paid in full and up to date. Any unpaid property taxes are a liability to the lender.

The mortgage company's fee for handling your paperwork. Not all states allow this fee.

This is what the mortgage company is charged for the review of your application by the lender's underwriter. Not all states allow this fee.

This is the cost of the wiring of the funds from the Lender to the Settlement Agent.

This is the cost the Broker/Lender charges to take your application for a mortgage.

This is Lender's fee, payable at closing, for approving the loan and committing to funding the loan.

Cost of the flood zone determination to confirm if the property is /is not in a flood zone.

Items that you may be required to prepay at the time of settlement, such as accrued interest, mortgage and hazard insurance premiums.

Prepaid interest due on the new loan from the date of funding to the end of the month. Every mortgage lender clears any interest due at time of closing for the month the closing takes place. Most mortgage companies use a 15 day estimate If you close early in the month you will owe more interest, if you close later you will owe less. Please keep in mind that you will have one month without a mortgage payment after closing. If you close Jan 15, your first regular payment will not be until March 1st.

Mortgage Insurance (PMI or MIP) may be required on certain loans (for conventional if you are putting less than 20% down above 80% Loan to Value). It is paid by the borrower and insures the lender against certain losses in the event of a foreclosure. MIP (Mortgage Insurance Premium) is for a FHA loans and PMI is for Conventional loans. FHA also has an upfront MIP fee, of the loan amount and is it usually financed into the loan. If you are applying for a FHA loan this will be explained in detail. For FHA loan if you put less than 10% down (90% or greater Financing) you will have MIP for the life of the loan, the premium does decrease annually. If you put 10% or more down (90% or Less Financing) you will have MIP for 11 Years.

The lender will require you to insure the property you are buying, since the property is the collateral for the loan. At the time of closing you must pay the entire first year's premium. For a Refinance if you already have hazard insurance, contact your insurance company and ask them for a copy of your insurance policy to show the lender. We are estimating the amount of the coverage at the time of application, and every borrower is free to choose their insurance provider. We will replace this figure with your actual amount once we know what the exact amount will be.

If your property is in a flood zone Flood insurance may be required. It is paid by the borrower and insures the borrower and lender against certain losses in the event of a flood. A Flood Certification to ascertain if the property is in a flood zone is ordered on every loan. Sometimes the Lender charges for this. It is a nominal fee usually $11-$20.

If you are getting a VA loan this is a loan designated for veterans, there is a funding fee which is financed into the loan.

Reserves held by the lender in an escrow account to pay for the borrower's future hazard (home) insurance premiums and taxes. Commonly referred to as Impounds or Escrows.

When escrowing Hazard Insurance a minimum of 3 months reserves are deposited to begin your escrow account on a purchase it may be more on a refinance depending on when the policy comes due. Escrowing also known as Impounds are required on loans with Loan to Value (LTV) ratios over 80%.

Most Lenders do not require a reserve deposit for Mortgage Insurance.

Estimated amount necessary to set up your escrow account. Your property taxes are being estimated at this point, and may be high or low in this assumption. Your title company will provide us with the final (and accurate) amount due when the tax search is done prior to closing.

When escrowing Flood Insurance a minimum of 3 months reserves are deposited to begin your escrow account on a purchase it may be more on a refinance depending on when the policy comes due. Escrowing also known as Impounds are required on loans with Loan to Value (LTV) ratios over 80% less than 20% Down.

Covers a variety of services performed by the title company and others.

The fee paid to the Title/Escrow company for closing the loan and handling all the financial transfers and payments associated with the transaction. The Loan Estimate (LE) will have an estimate of the fee, but it is set by the title company or attorney that is selected by the Borrower.

Pays for the service of creating your loan documents.

Several documents you sign during at closing must be notarized. This is a fee charged for that service.

Some states require an attorney handle the closing. If you live in one of those states this is our estimated fee for their services. The mortgage company does not set this fee, and you are free to negotiate this with the attorney you select to handle your closing. If you live in a stated that does not require an attorney to handle the closing the choice is yours whether you choose to have one represent you.

Guarantees that your home has no other liens on the property and guarantees your undisputed ownership. All lenders require that you have title insurance on the home.

Most closing firms will require the title history on your home to be examined before they can issue a new title policy. There are also judgment searches done on both the buyer and the seller to make sure the title is free from any encumbrances that could be attached to the property. The tax search gives the actual taxes on the property and shows if they have been paid and if there are any tax liens.

Fees paid by the buyer at the time of Closing to record the Mortgage and Deed.

To create a public record of your legal ownership of the property, the lenders notify the county government to record the transaction. The recording fee, which varies by state, is paid to the county. The mortgage and the deed are both recorded. If this is a refinance there will be a mortgage recording fee for the new mortgage and a mortgage release fee to record the old mortgage being paid off and released of record.

Stamps, affixed to the deed, showing the amount of transfer tax paid. Most states stamp the deed rather then actually affixing a stamp. Many localities collect a transfer tax whenever a property changes hands.

Stamps, affixed to the deed, showing the amount of transfer tax paid. Some collect a mortgage tax anytime a new mortgage is recorded. It is the state that determines who pays the transfer tax/fee; the Seller, Buyer or both. The Sales Contract will state if it follows what is customary in the state or if a different agreement is reached. Discuss this with your Attorney or Realtor.

Some states require a survey before the loan can be fully approved and cleared for closing. The actual cost is set by the survey company and has been estimated here. In New Jersey and Pennsylvania, a survey is not required on a Purchase Transaction. If the seller has a survey that is within 10 years old and the title company will provide a survey endorsement of no change and the old survey will be part of the title policy.

Cost of Pest or Termite Inspection, determined by the pest inspection company you choose. Some Lenders require termite certification, most do not. This is a cost that you pay at time of Inspection. VA Loans Require Termite Inspection and the Buyer is not allowed to pay for it.

Cost of Home Inspection, determined by the home inspection company you choose. This is also paid at the time of inspection and is not a requirement of the lender.

The cost of the wire transfer to the settlement agent to deliver funds to the closing.

The cost to overnight the loan package back to the lender.