Closing Costs

Closing Costs fall into three categories, and you may see all or NONE of these on your loan paperwork depending on the plan you have laid out with your mortgage advisor:

Hard Costs: These are costs administered by third party companies that are necessary to process and close your mortgage loan. Depending on the type and purpose of your mortgage loan, they may be paid by you out of pocket, financed as part of your loan, paid by the seller, or paid by Adrian, your mortgage planner in the form of a lender credit.

• Lender Underwriting Fee ($350-$750)
• Title Insurance (varies by loan amount and purpose of loan - $190-$800)
• Title Closing Fee ($150-$400 depending on title company, type of transaction, and area)
• Government recording fees ($80-$200 varies by area and how many pages need to be recorded)
• Pest Inspection ($80-$150). Not required for all loans.
• Well and Septic inspections ($80-$200). Not required for all loans.
• Credit Reports ($13-$100 depending on the vendor and the type of credit report)
• Tax Service Fee ($45-$75)
• Funding Fee (1.5%-2.5%). Generally only charged on government loans, and usually financed

Soft Costs: These are fees used to offset the costs of completing your loan, or in exchange for a lower interest rate.

• Processing Fee ($200-$450).  There is a great deal of paperwork done behind the scenes that loan processors complete.  Many times, this fee is paid directly to a processing company, or is used to offset the cost of employing processing staff.
• Origination fee. (0%-3%).  This falls under the general POINTS category.  Mortgage brokers generally put points in the origination section, whereas retail banks generally call the same fee discount.
•  Discount fee (0%-3%).  This falls under the general POINTS category.  Retail Banks generally put points in the discount section, whereas brokers tend to call the same fee origination.
• Commitment Fee ($0-$700). Generally this is charged on an FHA loan when the rate has been locked ahead of time.
• Administration Fee ($0-$650).  Generally, this is charged in place of another fee, such as underwriting.  Some lenders have specific guidelines for what fees can be charged.

Pre-Paid Expenses: often referred to as pre-paids.

• There is often a requirement to fund your escrow account so that there is enough money set aside to pay your taxes and insurance next time the bill is due.  Depending on the tax and insurance amounts for your home, this amount could vary from a few hundred to a few thousand dollars.
• Pre-paid interest is collected for the number of days left in the month before your new loan billing cycle begins.  For example, if you close your new loan on January 10th, you would pay for 20 days of interest at closing, and your new payment would be due March 1st.
• Home Owners Insurance.  Generally you will need to pay for a one year policy premium prior to closing if you don't have a policy in place.  In many cases, you can ask the seller to pay it!

Good Faith Estimate

Adrian will provide you with a Good Faith Estimate after you have reached a decision about your mortgage strategy.  Depending on your payment objectives, equity objectives, and life of loan expectations, your Good Faith Estimate can vary greatly.  Beware of any loan officer who provides a Good Faith Estimate before discussing these important things.  Fill out your Loan Application now, and Adrian or a member of his staff will provide you with several closing cost options and a comprehensive spreadsheet detailing the payment, equity, and tax deductions associated with each choice.