Closing costs are a big factor in distinguishing a good deal from a bad deal. It’s important to know what to expect when you receive your initial disclosures, which summarize the rate, terms, and proposed closing costs of the loan. We will discuss different sections of these disclosures in 2 sections: the Loan Estimate and the Closing Disclosure.
| Disclosure Section | Fee Name | Loan Estimate (LE) | Closing Disclosure (CD) |
|---|---|---|---|
| A. Origination Charges | Origination Fee | We usually don’t charge this but many Loan Officers do | Cannot change from the LE |
| Application Fee | We do not charge this fee | ||
| Underwriting Fee | $1595 for Conventional, FHA, VA – $1395 for NonQM | Cannot change from the LE | |
| Discount Points | This is only charged based on the rate/price of the loan. Some lenders will automatically include 1-2 “points” on the loan so that the rate is lower. Lower rate = more discount points. | Is locked in at time of rate lock but can be changed if the rate adjusts up or down | |
| B. Services You Cannot Shop For | Appraisal Fee | Different based on the appraiser/location/type of property and is always paid outside of closing. This is waived if an Appraisal Waiver is obtained from FannieMae or FreddieMac. Lenders cannot upcharge this fee. | |
| Credit Report Fee | This is a small passthrough fee from the credit bureau to the borrower | This cannot change from the LE | |
| Flood Cert Fee | Every property must have a determination if it is in a Flood zone. If this cert comes back as true, additional insurance will need to be obtained. This is a passthru fee | This cannot change from the LE | |
| *Upfront Mortgage Insurance | For Conventional programs with an LTV > 80 or all FHA or VA programs, this fee will be displayed here, if applicable. Lenders will typically find the best MI offer they can for Conventional programs. FHA and VA MI rates are set by the Government and cannot be changed. | This could change before closing if the parameters of the loan change. | |
| C. Services You Can Shop For | Title Fees | This can be 1 or more fees and are set by the provider that is used. You can shop around these fees and use a different provider if you wish. For a refinance, we use a specific provider for most of our transactions in order to get the best deal for our customers. For a purchase, the vendor is determined by the Seller. | Cannot change from the LE unless new service providers are shopped for. |
| Settlement/Escrow Fees | Similar to Title Fees | Cannot change from the LE unless new service providers are shopped for. | |
| Inspection Fees | We use a 3rd party vendor to find service providers near the property and display their fees. The service provider can be changed as well which may or may not alter the amount disclosed for this fee. | Cannot change from the LE unless inspections find additional requirements or new service providers are shopped for. | |
| E. Taxes and Government Fees | Recording Fees | This fee is set by the County that the property is in | This has a tolerance of changing by 10% at most |
| *Transfer Taxes | Charged by the county, state, or municipality in some but not all areas | This cannot change from the LE | |
| F. Prepaids | Homeowners Insurance | This fee amount is determined by the homeowner’s insurance company, not by us the lender. You can shop for any provider you want but the fee amount here includes a determined number of months needed to fund an impound account, which is optional unless required based on the LTV of the loan. | This can change and is calculated based on a more closely estimated closing date. |
| Property Taxes | This fee is set by the local state or government authority, not by us the lender. These are estimates at this point based on when property taxes have been paid and when they are due. | This can change and is calculated based on a more closely estimated closing date. | |
| Prepaid Interest | This fee changes based on the rate that is included in the LE as well as the estimated closing date. | This can change and is calculated based on a more closely estimated closing date. | |
| *Mortgage Insurance | If mortgage insurance is required and an impound account is setup, a certain number of months of cushion will be required to fund the impound account so that mortgage insurance premiums can be paid. | This can change and is calculated based on a more closely estimated closing date. | |
| H. Other | Other Borrower Selected Fees | If any additional services are dictated by the borrower to be obtained, the charges for those services will be included here. | This fee amount can change from the original disclosure on the LE. |
| J. Total Closing Costs | Lender Credits | This is a credit that can be offered by us, the lender in order to offset the closing costs. This comes into play when the borrower asks for a no closing cost loan or the rate they have selected includes some additional credit available that the loan officer will provide back to the borrower. Talk to us about this option as we like to always include some sort of credit to the borrower to cover closing costs. | This will be selected at time of rate lock and can change if an extension is required or the rate is changed. |
