|This video walks consumers through the actual closing process including how to make sure the loan they were offered closely matches what they encounter at the settlement table. In particular, HUD will walk the viewer through the HUD-1 Settlement Statement and demonstrate ways consumers can compare their actual costs with those reflected on their Good Faith Estimate.|
|Loan Origination Points or Mortgage Broker Fee
About seventy percent of loans are originated through mortgage brokers. Wholesale lenders offer lower costs/rates to mortgage brokers than you can obtain directly, so you are not paying “extra” by going through a mortgage broker. Many lenders are wholesale only and do not have retail divisions for the public. The loan origination fee is measured in “points.” One point is equal to one percent of the mortgage loan.Loan Discount Fee
Discount points are often used to describe a type of fee that lenders charge. Discount points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage. A point equals 1 percent of the loan amount. So, if you and your lender agree to a mortgage of $100,000, one point would equal $1,000.
Typically, each point you pay for a 30-year loan lowers your interest rate by .25 of a percentage point. If the current interest rate on a 30-year mortgage were 7.75 percent, paying one point would lower the interest rate to 7.50.
Ask your loan officer if you have the option of paying 1, 2, or 3 discount points – or you can choose not to pay any discount points. It often makes more sense to pay discount points if you plan to stay in your home for a long time.
Tax Related Service Fee
Wire Transfer Fee
Closing or Escrow Fee
Document Preparation Fee
Lender’s policy (mandatory): This protects the lender should a flaw in the title be detected after the property has been purchased.
Owner’s policy (optional, but recommended): This protects you should a flaw in the title be detected after the property has been purchased.
Generally, in the case of a purchase transaction, the buyer pays the cost of both policies. Check with your insurer, because you may receive a price break if you seek a combined lender/owner policy or if you purchase a “reissue” policy from the company that previously insured the title.
Courier Fee / Overnight Delivery
Private Mortgage Insurance
Hazard Insurance Premium
Homeowner’s Insurance Impound
Property Tax Impound
In California, property taxes are paid semi-annually, with one payment in arrears and one in advance. Your monthly mortgage payment includes 1/6 of your semi-annual property tax. Therefore, you will need to deposit the number of months worth of property taxes into the escrow account that will yield six months worth of property taxes in the account at the time that property taxes are due. For example, let’s assume your first mortgage payment is due January 1. The next property tax payment is due in April. You will make three mortgage payments (January, February, and March) before property taxes are due. That means that your property tax payment will be short three months worth of payment. Therefore, you need to deposit three months worth of property tax into the escrow account. That way, come April 10th, the lender can pay the property taxes.
Refinancing Associated Costs
Homeowner’s Association Transfer Fee