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Find Your LenderResources » Examining the good faith estimate
The total fees being charged to a borrower on a mortgage transaction are itemized on a disclosure document called the good faith estimate. The fees represent the estimated total costs likely to be incurred at settlement. It is the responsibility of the bank or mortgage brokerage you are working with to provide this statement within 3 business days of completing an application. Pay close attention to the fees you see on the good faith estimate and be sure that your good faith estimate closely resembles your final settlement statement you sign when you close on your loan.
The good faith estimate serves as a wonderful tool to compare mortgage offers. The fees you might find on the Good Faith Estimate are categorized as follows:
800 ITEMS PAYABLE IN CONNECTION WITH LOAN:
This fee is the upfront cost, typically expressed as a percentage of the loan amount, charged to originate the loan. It is a basic service fee usually equal to 1% of the loan amount.
This is an upfront cost paid to the lender to obtain a lower interest rate.
This fee covers the cost of the property inspection to determine the market value of the subject property.
This is the cost of the credit report.
This is the lender’s cost of inspecting a property – often associated with construction loans.
This is the fee a broker might charge and is usually considered a "junk" fee.
This fee covers the cost of tax collection reporting for mortgages where the taxes are escrowed.
This is the charge for processing the loan which includes any information collection and reporting needed to fund the mortgage.
This fee is paid to the lender for examining the loan file for approval or denial.
The wire fee covers the cost of wiring money from lender to title/escrow.
900 ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE
This is your prepaid interest for your mortgage loan calculated from the day of funding to the end of the month.
This is the prepaid mortgage insurance premium, if you have one.
The property/hazard insurance fee required to be paid before or at closing in a purchase transaction - Equal to 1 year’s premium.
The funding fee for a VA loan.
1000 RESERVES DEPOSITED WITH LENDER
This is any prepayment of your future hazard insurance expense when escrowing those costs. It is a cushion.
This is any prepayment of your future mortgage insurance expense.
This is any prepayment of your future school tax expense and is not common in all states.
This is any prepayment of your future tax expenses, such as property taxes.
This is any prepayment of your future flood insurance expense. It only applies to properties that require it.
1100 TITLE CHARGES
This is the cost of the escrow or title company that provides closing services for the loan. The escrow or title company also handles the disbursement of all funds involved in a real estate transaction.
This is the charge for preparing the loan documents.
This is the cost of the notary. This fee covers the cost of having all legal documents notarized.
This is the fee for any legal charges or services rendered.
This is the cost of insuring the title of the property. It protects the property against improper liens.
1200 GOVERNMENT RECORDING & TRANSFER CHARGES
This is the cost to record the mortgage transaction with the county recorder’s office.
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