- Loan origination fee: covers the costs of evaluating and processing your mortgage loan.
- Points: the percentage of your loan amount, paid at closing.
- Appraisal fee: The fee for having your new home appraised may be rolled into the closing costs. The cost may vary based on the amount of your loan, and the type and use of the property (i.e. condo, rental, etc).
- Credit report: covers the expense of your credit history report.
- Interest payment: You may pay interest on your mortgage loan to cover the time between the closing date and the date your first mortgage payment period begins.
- It is important to note that interest on a mortgage is usually paid in arrears at the end of the time period it covers. For example: If a closing is on May 15, and your first monthly payment starts to accrue interest on June 1, an interest payment covering the period between May 15 and May 31 may be required at closing. Consider this timing when scheduling your closing. It is a fee you can reduce by closing near the mortgage due date.
Escrow Fee
- Escrow account fees: A trust account created by a third party to hold money. Generally, this money goes to pay property taxes and insurance. To fund the account, your monthly mortgage payments may include one-twelfth of your annual property taxes and insurance charges. The first escrow fee may be due at closing.
Title Fees
- Title search: pertains to the examination of public records to ensure that no one but the seller has a valid claim to the property.
- Title insurance: relates to insurance that protects the lender and buyer from losses that may result from disputes over the property's title. Typically, the buyer purchases the Lender Title Insurance.
Other Third Party Fees
- Document preparation fee: charged for the preparation of the closing documents.
- Underwriting Fee: covers the costs of the underwriting process, which is the analysis of the risk involved in making a mortgage loan.
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