Closing Cost

Understanding Closing Cost

Mortgage closing costs can be grouped into 5 categories. Lender Fees, Title Fees, Government Fees, Third-Party Fees, and Pre-paid Items.

Lender Fees:
  • Origination Fee – A fee charged by a lender/broker as compensation for providing you with a mortgage loan.
  • Discount Fee – “Points” you can pay to buy down an interest rate. The more points you pay, the lower the interest rate.
  • Application Fee – Lenders/Brokers may charge this fee up front to offset the cost of processing your loan.
  • Processing Fee – A fee to cover the costs to process your loan.
  • Underwriting Fee – A lender/broker fee charged to determine if the lender is willing to lend you money based on your application for a mortgage.
  • Administrative Fee – Similar to the Processing Fee, this is a fee to cover the expenses of processing your loan.
  • Document Preparation Fee – A fee to prepare your specific loan documents to be signed at closing.
  • Courier Fee – This fee may or may not be charged by a lender/broker. It covers the cost of sending your loan documents to different parties.
  • Wire Transfer Fee – This fee may or may not be charged by a lender/broker. A wire transfer is the way lenders provide your loan funds to the closing agent for disbursement to various parties.

 

What is a Closing Disclosure?

A Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

Your lender is required to give you the Closing Disclosure at least three business days before you close on the mortgage loan. This three-day window allows you time to compare your final terms and costs to those estimated in the Loan Estimate that you previously received from the lender. The three days also gives you time to ask your lender any questions before you go to the closing table.

Page 1: Information, terms, projected payments costs at closing
Page 2: Closing cost details including loan costs and other costs
Page 3: Cash needed to close and summary of transaction
Page 4: Additional information regarding your loan
Page 5: Loan calculations, disclosure information and contact information