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Loan Origination Fee – The loan origination fee is
often referred to as "points." One point is equal
to one percent of the mortgage loan. As a rule, if you are
willing to pay more in points, you will get a lower interest
rate. On a VA or FHA loan, the loan origination fee is one
point. Anything in addition to one point (on government loans)
is called "discount points."
Loan Discount – On a government loan, the loan origination
fee is normally listed as one point or one percent of the
loan. Any points in addition to the loan origination fee
are called "discount points." On a conventional
loan, discount points are usually lumped in with the loan
origination fee.
Appraisal Fee – Since your property serves as collateral
for the mortgage, lenders want to be reasonably certain of
the value and they require an appraisal. The appraisal looks
to determine if the price you are paying for the home is
justified by recent sales of comparable properties. The appraisal
fee varies, depending on the value of the home and the difficulty
involved in justifying value. Unique and more expensive homes
usually have a higher appraisal fee. Appraisal fees on VA
and FHA loans are higher than on conventional loans because
they require the appraiser to inspect items not strictly
associated with value.
Credit Report – As part of the underwriting review,
your mortgage lender will want to review your credit history.
The credit report can be as little as seven dollars, but
normally runs between $21 and $60, depending upon the type
of credit report required by your lender.
Lender’s Inspection Fee – You normally find
this on new construction and is associated with what is called
a 442 inspection. Since the property is not finished when
the initial appraisal is completed, the 442 inspection verifies
that construction is complete with carpeting and flooring
installed.
Mortgage Broker Fee – About seventy percent of loans
are originated through mortgage brokers and they will sometimes
list your points in this area instead of under Loan Origination
Fee. They may also add in any broker processing fees in this
area. The purpose is so that you clearly understand how much
is being charged by the wholesale lender and how much is
charged by the broker. 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.
Tax Service Fee – During the life of your loan you
will be making property tax payments, either on your own
or through your impound account with the lender. Since property
tax liens can sometimes take precedence over a first mortgage,
it is in your lender’s interest to pay an independent
service to monitor property tax payments. This fee usually
runs between $70 and $80.
Flood Certification
Fee – Your lender must determine
whether or not your property is located in a federally designated
flood zone. This is a fee usually charged by an independent
service to make that determination.
Flood Monitoring – From time to time flood zones are
re-mapped. Some lenders charge this fee to maintain monitoring
on whether this re-mapping affects your property.
copyright 2000 by Terry Light and
RealEstate ABC
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