When you close on your home loan, there will be certain costs that are connected with it, and lenders are obliged to inform you ahead of time as to what they will be.
This estimate gives all of the features and costs involved with the mortgage, from rate and terms all the way to administrative fees.
One of the problems is that there is no benchmark for presenting these costs, and therefore most lenders have different terms for the various items, some items might be lumped together by one lender but separated by another, etc.
This makes it difficult to know what you are paying for.
The best way to see exactly what will be included in the closing fees is to look at the section called “Total Estimated Funds Needed to Close”, or another expression like this. This give the very important dollar total that the borrower will have to cover.
The loan origination fee is usually one of the biggest fees. There are banks that offer flat fees, but the majority will charge one half of one percent to up to 2 percent. This can consequently be a large number, so it is definitely worth checking for correctness.
An appraisal is required on the home, and the buyer will be charged for the appraisal. Just check with another appraisal firm to see if the fee is in line with the market. This type of thing is why the three day review period is granted.
Another item that will be listed is the processing fee. This fee represents the work the bank puts into the loan to get and review the information. You may see these costs listed individually, as administration, courier, etc. In this area, a borrower may have some room for negotiation.
The underwriting fee is another fee on the closing statement. This fee represents the cost to the lender of making sure you are a creditable applicant, such as the review of the application, the credit report and the employment history, as well as the review of the appraisal. This is the information used to make the determination about the loan.
Attorney and title fees are another item that the borrower should review. You may be able to cut costs on these fees by choosing your own closing attorney.
Review the loan broker’s fee, if you are paying the commission. There will be no broker’s fee on the statement if the lending institution pays the commission. There is a possibility that you can bring this rate down.
Fees related to the home itself should be shown on the closing statement. The seller may have paid homeowner’s premiums and taxes ahead of time and will receive a credit on the closing statement for the period covered after the closing date.
Be wary of charges not listed, but combined with others. You are entitled to get a listing of all charges. The GFE is an estimate, but it should not be too far at closing from the original numbers you were supplied with. If you are lucky enough to get a decrease in any of your fees, get a new,statement in writing before the closing takes place.
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