No Bull Mortgage
 

Closing Costs

The fees listed below represent a conservative estimate for a typical mortgage. Upon your submission of a full loan application, and your selection of program design, you will receive a detailed Good Faith Estimate and Fee Worksheet to fit your preferred specific loan scenario.

Loan Origination Fee 1-2%
Appraisal Fee $450-$550
Credit Report Fee $15-$25
Processing Fee $695
Assorted Lender’s Fees  $295-$1,600
Lender’s Wire Transfer Fee $30
Escrow Fee $250-$1,500
Lender’s Title Insurance Policy Based on Loan Amount
Owner’s Title Insurance Policy Based on Sales Price (Purchase only)
County Recording Fee $35-$150
Mortgage Insurance 0% to 1.15% (depending on program)
Hazard Insurance Premium Contact your Insurance Agent for a quote POP-UP
Hazard Insurance Reserves Based on closing month and premium

Definitions

Advisor Fee

The advisor fee is typically a flat fee or minimum, a percentage of the funds borrowed, or both. This fee is for the customized client financial structuring, the feature design, provider and placement research, and process management.

Discount Fees, or “Points”

Discount points (each ‘point’ is 1 percent) are effectively interest amounts prepaid at closing in return for the permanent reduction in interest rate

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.

Appraisal Fee

Since your property serves as collateral for the mortgage, lenders want to be certain of the value and they require an appraisal. The appraisal determines if the value of the home is justified by recent sales of comparable properties. Unique and more expensive homes usually have a higher appraisal fee.

Credit Report

As part of the underwriting process, the lender will want to review your credit history. This is the fee paid to obtain a report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness.

Tax Related Service Fee

To make sure your property taxes are paid on time, the lender hires a tax service company to monitor your tax payments. This is how your lender makes sure the government doesn’t need to sell your home to pay back taxes.

Processing Fee

The fee paid usually to the broker for the processing of your loan.

Underwriting Fee

The fee paid usually to the lender for the process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower’s creditworthiness and the quality of the property itself.

Wire Transfer Fee

Mortgage lenders generally wire the funds to the escrow company handling the loan closing. Funds are wired through the Federal Reserve System and done through commercial banks that are members of the Federal Reserve Bank. Usually, banks charge mortgage lenders a fee for the wire transfer service.

Closing or Escrow Fee

The fee paid to an independent third party who acts as the agent for buyer and seller, or for borrower and lender, carrying out instructions of both and disbursing documents and funds. Escrow closes and the transfer of property or document is completed upon fulfillment of certain conditions specified in the written instructions, whereupon the necessary deeds and other instruments are recorded.

Document Preparation Fee

Either the escrow company or the lender may charge this fee. Once underwriting has approved your loan, the legal and miscellaneous documents required at closing must be prepared. The lender may charge a fee for the preparation of the mortgage note, deed of trust, Truth in Lending forms, and escrow instructions. The escrow company may charge for the preparation of other documents required to conclude your transaction.

Notary Fees

Most sets of loan documents have two or three forms that must be notarized. Usually your settlement or escrow agent will arrange for you to sign these forms at their office and charge a notary fee as prescribed by California law.

Title Insurance

Your lender will require that you buy title insurance to ensure that you are receiving a “marketable title.” There are two types of title insurance policies:

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.

Recording Fees

The fees paid for the filing of documents affecting real property as a matter of public record, giving notice to future purchasers, creditors, or other interested parties. Recording is controlled by statute and usually requires the witnessing and notarizing of an instrument to be recorded.

Signing Fee

If you are unable to sign in the escrow office that is handling your transaction, it may be necessary to hire a Notary to meet you at an agreed upon location either your home or another escrow office within your area. The Notary will charge a signing fee, which covers their travel costs or time charge.

Courier Fee / Overnight Delivery

Lenders and escrow companies use couriers to deliver documents. Some lenders will list this fee individually or include it in the administration fee or processing fee.

Interest

Interest on your mortgage is paid in arrears. Your payment, usually due on the 1st of the month, pays interest accrued for the previous 30 days. Your first mortgage payment is on the 1st of the second month after closing; so, if you close in the month of January, your first mortgage payment is March 1st. The March payment includes interest that has accrued during the month of February.

Pre-paid Interest

Mortgage loans are usually due on the first of each month. Since loans can close on any day, a certain amount of interest must be paid at closing to get the interest paid up to the first. For example, if you close on the twentieth, you will pay ten days of pre-paid interest.

The only interest that you prepay is when
you close. At closing, you pay for the interest that will accrue from the date of your closing to the end of the month. So, if you close on January 19, you pay for interest from January 19 to February 1. The worst-case scenario is that you are charged for 30 days of interest, if you close at the beginning of the month.

Private Mortgage Insurance

Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.

Hazard Insurance Premium

You are required to pay your one-year premium for homeowner’s insurance at or before closing (if you choose to pay the insurance company directly, in which case, you bring proof of payment to closing). The lender requires that you have homeowner’s insurance to protect the collateral of the mortgage loan.

Escrow/Impound Account Descriptions

Homeowner’s Insurance Impound

If your down payment is less than 20%, you will be required to put 2 months’ worth of the annual homeowner’s insurance premium into the escrow account, otherwise you will place 1 month into the account. Your monthly mortgage payment will include 1/12 of the annual premium in the payment, which is kept in the escrow account until the annual premium is due. If your down payment is less than 20%, you will have a two-month “cushion” in the escrow account. Cushions are allowable but limited under RESPA; in other words, RESPA accepts the practice of the lender’s wanting to cushion the escrow account but limits the amount of the cushion to a reasonable amount.

PMI Impound

Private Mortgage Insurance (PMI) protects the lender in the event that you default on the mortgage loan. It is usually required if your down payment is less than 20%. You have to deposit 1 month’s worth of PMI premiums into the escrow account, depending on the lender.

Property Tax Impound

How much you need to deposit in the escrow account for property taxes depends on three factors:

  • When are property taxes due in the state where the property is located?
  • Are the property taxes paid in arrears or in advance?
  • What month are you closing in?

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

Interest

When you close the transaction on your refinance, there will most likely be some outstanding interest due on the old loan. For example, if you close on January tenth (and you made your last payment on January 1st), you will have ten days interest due on the old loan and twenty one days prepaid interest on the new loan (see section above for prepaid interest). Your first payment on the new loan would not be until March 1st since you have already paid all of January’s interest when you closed the refinance transaction. Check with your current lender for the per diem interest charge.

Reconveyance Fee

Your existing lender charges this fee when they “reconvey” their collateral interest in your property back to you through recording of a Reconveyance. This fee can vary drastically, but is typically from $50 to $250. Check with your current lender for the amount charged.

Demand Fee

Your old lender may charge a fee for calculating payoff figures. This fee can also vary drastically, but is typically from $30-$100. Check with your current lender for the amount charged.

Homeowner’s Association Transfer Fee

If you are buying a condominium or a home with a Homeowner’s Association, the association often charges a fee to transfer all of their ownership documents to you. This fee will vary depending on the will of the homeowner’s association.

Wholesale Delivery Incentives

Known by various industry terms (such as yield spread premium, service release premium, overage, rebate, negative points, etc.) a wholesale bank may offer lender-paid incentives to an origination firm for the services and delivery of loans in general to that particular bank to win the business versus the wholesale competitors of that bank, assuming the same interest rates in the overall market. As an example, when certain loans have a market rate of 6%, in order to attract the business flow of a broker, Wholesale Bank A may offer an incentive of $200, versus Wholesale Bank B which offers $100, and Retail Bank C which offers nothing.