Loan-Related Closing Costs

Loan Origination Fee
This covers the administrative expenses in setting-up and processing the loan. The loan origination fee may be a percentage of the mortgage amount.

Points (optional)
An option for the home buyer is to pay points to lower the interest rate at which the loan will be repaid. Each point equals 1 percent of the mortgage amount. For example: on a $150,000 loan, 1 point would equal $1,500.

Appraisal Fee                                                                                                                  The fee for having the house appraised may be incorporated into the closing costs or payment may be required by the lender at the time the loan application is submitted.

Credit Report
The lender uses a credit report to determine the creditworthiness of the loan applicant. This fee is often paid when the loan application is submitted

Loan Processing Fee

Underwriting Fee
This fee is a lenders administrative fee for reviewing and approving the loan package.

Tax Service Fee                                                                                           A fee collected to set up third-party monitoring of the borrower's property tax payments. This is done to ensure that the payments are made on time and to prevent tax liens from occurring to the detriment of the lender.

Flood Certification                                                                                      This is a fee to obtain documentation that indicates whether or not a property is in a federally-designated flood zone, and whether or not flood insurance is required for that property.

Wire Transfer Fee                                                                                         A fee charged by some lenders to cover the cost of wiring the mortgage funds to the appropriate parties, such as the title company or attorney, so that they are available for closing.

Interest Payment
Typically the buyer is required to pay interest on the mortgage loan to cover the time between the closing date and when the first mortgage payment period begins. For example: If closing is on May 15. Your first monthly payment begins to accrue interest on June 1 with your first mortgage payment due July 1. At closing an interest payment covering the accrual period between May 15 and May 31 may be required.

Escrow Account
At closing a payment may be required to fund the escrow account if the lender is paying home insurance, property taxes and/or other expenses out of the escrow account.