subject: Be Sure To Review The Good Faith Estimate Of Your Home Loan Closing Costs [print this page] If you are going to borrow to purchase a home, one of the things you should keep in mind is the total of closing fees, which a bank has to inform you about in advance.
This Good Faith Estimate lists all of the fees that will be charged to the borrower when the home loan closes.
The problem with these estimates is that each bank uses their own form, so it may be difficult to compare the fees.
This makes it hard to realize what the borrower is paying for.
The best way to see exactly what will be included in the closing costs is to look at the section called "Total Estimated Funds Needed to Close", or another expression like this. In this statement, you can see the fees you will have to cover when you close.
One of the largest items will be the mortgage origination fee. Some very competitive lenders may charge a flat fee, but the rest charge a percentage of the mortgage, between .5% and 2 %. Because of this, this can be a large number, so it is well worth checking for accuracy.
An appraisal is required on the property, and the buyer will be charged for this. To make sure it is reasonable, you can check the fee with other appraisal companies. The three day review period gives you the time to do this.
The borrower should look over the processing fee. This is the amount that the bank will receive directly, for the trouble of processing your loan application. You may see these costs listed individually, as administration, courier, etc. In this area, a borrower may have some room for negotiation.
Next, look at the underwriting fee. The bank will charge for the compilation and review of documents relative to the approval of the mortgage, and this is called the underwriting fee. This review is necessary to the approval process.
Title fees and attorney's fees are the charges made by a title agency or an attorney to handle the closing. These can frequently be reduced by using your own lawyer.
If there are mortgage broker commissions involved, the buyer may have to pay them. (If there is no commission shown, this means the bank is paying it.) If you are paying it, you can try to negotiate this cost.
The estimate will also list items related to the house. The seller may have paid homeowner's insurance and taxes ahead of time and will receive a credit on the closing statement for the period covered after the closing date.
Watch out for fees that are combined. You are entitled to get a listing of all charges. The total of the costs listed on the GFE should be fairly accurate. If you are fortunate enough to get a decrease in any of your fees, get a new,statement in writing before the closing occurs.
