Fees And Points

Down Payment: When you borrow money for a home, you may be required to contribute some of your own money toward the purchase of the home. This money is called your down payment. The amount you need varies depending on the type of mortgage you choose, the purchase price of the home and your financial situation.

Closing Costs and Prepaid items: In addition to your down payment, you will need to pay closing costs. When you apply for a loan, you will be given a good faith estimate by your loan officer which will break down the closing costs for you. Typically they include:

  • Origination and lender fees. These are the fees that are required to originate, process, and underwrite your loan for approval.
  • Items paid in advance, including first-year homeowner’s insurance premium, prepaid interest up to the date of your first mortgage payment, and any applicable homeowner’s association fees and dues.
  • Escrow account, an account held by the lender into which the homebuyer usually pays for city/county property taxes, mortgage insurance, homeowner’s insurance and flood or earthquake insurance, if required.
  • Closing fees which include title insurance, attorney fees, and title processing fees.
  • Recording and tax charges.

Mortgage Payment: Your mortgage payment consists of 4 components: Principal, Interest, 1/12 of your annual taxes, and 1/12 of your annual homeowner’s insurance. In addition, your payment may include mortgage insurance.

Mortgage Insurance: If your down payment is less than 20% of the home purchase price, you can expect to pay some form of mortgage insurance. Home loans that are insured let you buy a home with a lower down payment than the lender would otherwise require. Mortgage insurance costs vary, depending on the amount of your down payment and the type of loan you select. Two government agencies — the Federal Housing Administration (FHA) and the Veterans Administration (VA) — provide insurance for certain kinds of mortgage loans. Mortgage insurance is also available from private companies.

Is there a fee charged or any other obligation if I complete the application? There is no obligation for completing an application. The only upfront charge is the appraisal and credit fee which is collected at time of application. These fees will appear at closing as a credit on your settlement statement. Also, any unused portion of this money will be refunded back to you.

Should I Pay Points?

When you pay "points," you pay interest in a lump sum upfront to get a lower rate on your fixed rate mortgage.

Each point costs 1% of the mortgage amount. The more points you pay, the lower your mortgage rate. Your loan officer can help you decide if “buying” a lower rate is more beneficial to your situation.