LOAN ORIGINATION FEE: This is part of the total fees charged by the lender to process the loan application. Some lenders will
omit loan origination fees -- with a corresponding increase in the loan interest rate.
LOAN DISCOUNT: A discount point is based on the interest rate being quoted for a particular loan amount. Loan discounts
are related to the secondary market and are affected by the price at which the loan can be sold in the marketplace.
When a loan is quoted without points, it is called "par" pricing. A par loan would call for -0- discounts at a particular
interest rate. If the market price for a $100,000 loan with an 7½% interest rate is $99,500, the lender will charge
a ½% discount point to the borrower to make up the $500.00 in price. In the case of an interest rate where the yield
is more attractive for a loan, the lender will get back an amount in the transaction, which is called "overage". This
overage may or may not be passed to the borrower and is usually treated as part of the profit in the loan for the lender.
APPRAISAL FEE: The appraisal fee is the fee charged by a professional appraiser to determine the market value of the subject
property relative to other properties in the area that are similar in nature and have sold recently (usually the last 12 months).
The appraisal fee will vary depending upon the location and type of property, but usually runs in the $225 to $350 range.
CREDIT REPORT FEE: This fee is charged by the third party company to run a credit history on the borrowers. The is generally around $50
to $60 and will be higher if the borrower is self-employed, or the borrowers are not married.
LENDER'S INSPECTION FEE: Generally this fee is not required unless there is some circumstance listed in the appraiser's report indicating
the need for repairs, or if the house is under construction at the time the loan is approved. This fee ranges between
$70 and $250.
MORTGAGE BROKER FEE: This fee is reported if the originating lender is not funding the loan at closing. Generally the lender
funds the loan for the broker at closing and this fee is listed in the Good Faith Estimate.
"CLO" ACCESS FEE: This is a fee charged to the borrower by a third party, such as a Realtor. This fee is charger for services
relative to assistance in determining the mortgage most suitable for the borrower. If the borrower agrees to pay the
fee, it must be disclosed on the Good Faith Estimate.
YIELD SPREAD PREMIUM: The amount of money paid to the originating broker by the lender for the purchase of the loan. This premium
must be disclosed on the Good Faith Estimate if the purchasing lender is providing funds at the closing, as It is considered
part of the profit in a loan for the originating lender.
REAL ESTATE TAX SERVICE: If the lender is to escrow property taxes on behalf of the borrower there is a fee to set up the tax servicing
account. Usually there is a tax servicing company that provides the annual disbursement of taxes on behalf of the lender
for the borrower. The lender will provide this fee information.
UNDERWRITING FEE: This fee is charged by the lender purchasing the loan. This fee ranges from $100.00 to $350.00 and is charged
since the purchasing lender provides the underwriting staff.
SETTLEMENT (CLOSING) FEE: The title company who closes the loan will charge this fee. The lender will provide the information for
this fee.
TITLE EXAMINATION FEE: If there is an outside or third party title examination, this fee will be charged and passed on. It usually
ranges from $100 to $150.
TITLE INSURANCE BINDER: A binder is issued in lieu of the final title policy at the time of closing. The attorney issuing the binder
usually charges a fee of $20 to $25 for the binder. The final title policy is issued after the documents are recorded.
DOCUMENT PREPARATION FEE: This fee is charged by the lender for preparation of the closing package that is delivered to the attorney.
It is used by some lenders to supplement the revenue for a loan.
ATTORNEY'S FEES: This fee charged by an attorney will vary from region to region and may be a flat fee, or can be a percentage
of the loan amount. If a particular attorney is selected by the borrower, the attorney will provide a quote on those
fees.
TITLE INSURANCE (LENDER COVERAGE): The lender requires that protection is offered for the clear title to a particular property in the case of default
by the borrower, or in the case of claims by third parties against the property. The cost is based on the loan amount
and can be determined by a chart offered by a title agency in your state.
TITLE INSURANCE (OWNER'S COVERAGE): The borrower may choose to purchase a separate policy for protection of the title for the same reasons the lender
chooses to be protected. This would allow the borrower to transfer or sell the property before any disputes were settled,
since the new owner would be protected by the title insurance company. All borrowers should be advised to purchase this
type of coverage.
RECORDING FEES: The normal fee for recording is $18 for the first page and then $3 per page thereafter. The typical charge
for recording is $69, depending on the number of pages included in the Deed of Trust.
TAX STAMPS: This fee may be charged by a city or county to provide evidence of payment of taxes.
STATE TAX STAMPS (TRANSFER TAX): Some states require the seller to pay a tax to the state for transferring of property. It is based on the
sales price of the property. In some states there is also a tax called "Intangible Tax" that is also based on the loan
amount.
TRANSFER AND ASSIGNMENT FEE: This fee may be charged in the case of the originating lender closing in its name and the purchasing or secondary
lender purchasing the loan simultaneously. The lender will provide this information.
SURVEY: The survey is required at the option of the lender. It should be done to determine whether the property
is encroached, or is in a floodplain. This fee ranges from $175 and up.
PEST INSPECTION: The seller must provide a report as to whether there is infestation of the wood in the property and that the property
is free from termites. In out-state areas, the pest inspection fee may be a cost of the borrower. In the case of
a refinance, the borrower pays for the pest inspection.
VA FUNDING FEE: If the borrower is receiving VA disability payments, the funding fee is waived. If the borrower has never used
their VA loan and requests a 100% loan, the fee is 2%. On the other hand, If the borrower has used their VA eligibility
before, the fee is 3%. There is a graduated scale of reduced funding fees if the borrower is putting money down and it is
a first-time loan. This fee may be added to the loan for a 102% or 103% loan-to-value for a purchase.
RURAL DEVELOPMENT FUNDING FEE: This fee is typically 2% of the loan amount and is paid at closing to the local Rural Development office.
This amount may occasionally be paid by the seller, but is typically paid by the borrower.
HAZARD INSURANCE ESCROW: The borrower pays at closing the cost of hazard insurance for a 12 month period. The lender will collect
each month an amount equal to 1/12 of the annual premium and add it to the escrow account. Each year at renewal time,
the lender will pay the annual premium from the escrow funds. Since the first loan payment will not be due until the
second month after the loan closes, the lender will collect at closing an additional two months of hazard insurance premium.
Adding the two months to the 10 months that will be collected before the annual premium becomes due assures the lender of
having sufficient funds in the escrow account to pay the annual premium. The Good Faith Estimate could reflect a total
of fourteen months of hazard insurance premium for the reasons stated above.
MORTGAGE INSURANCE ESCROW: For the same reasons stated above, the lender will collect two months of mortgage insurance premium for the two
initial months of the loan in which no payments are made to the lender. The calculations should be made using mortgage
insurance premium charts.
PROPERTY TAX ESCROW: The amount of property taxes collected for escrow at closing will vary depending upon the rates in the county
in which the property is located and the number of months to be collected. There is a property tax chart provided below
to be used for the purpose of making the calculations for the number of months. You will need to check with either the
lender or your local county taxing authority to get the property tax rates in the respective county.
FLOOD INSURANCE ESCROW: In the case of a property located in a floodplain, the lender will require flood insurance and will collect two
months in escrow at closing.
TAX ESCROW CHART - PURCHASE OF PROPERTY:
