< Read Another Article FEES: Everything you need to know! Fees, fees and more fees. The next fee you'll have to pay is the fee for listing all the fees you have to pay. And how will you know that there is not another fee to pay after that? You won't, because one will be invented just to keep you guessing. Sadly, this may not be too far from being true. But let's take a look at the fees we do know about, explain them and make sure that when you go shopping for a loan you will be comparing apples to apples. Let's first break them down by entity through whom they are paid. Most all the fees are collected through the Title Company when you sign the loan papers and you will be provided an itemization on a balance sheet, otherwise know as a HUD-1 form or a Settlement Statement. There are basically three different categories or entities collecting fees or being paid something on behalf of someone else. Fees from the lender, the banker or broker and the Title Company. Whether you are dealing with a mortgage broker or a mortgage banker, your loan agent will most generally be your point of contact and coordinate the details of the transaction with respect to these categories. Since the mortgage on one's home is nearly always the largest single investment, it goes without saying the agent should be someone you trust and can confide in. However, one cannot do this in total blind faith, hence the importance to have a general knowledge of fees that can be expected to pay. And how you can you do that if you don't have a list of them? So when you first pick up the phone, ask your loan agent for a "Good Faith Estimate". Let it be your pet peeve if a loan agent is unwilling or reluctant to give you a "Good Faith Estimate & Truth In Lending Disclosure". By law, they are required to provide you this information within three business days after they receive a loan application from you. But who wants to wait that long? Get it up front! These forms are your basis for comparison and you have no idea where you want to go unless you see them first. A lender should be able to quickly fax you these two forms. All they need from you is to know the value of the property being purchased or refinanced, the loan amount, the number of points you choose to pay and the loan program you choose, i.e., 30 year fixed, 15 year fixed, etc. The first fees you will be asked to fork over are for the credit report and appraisal. The credit report runs between $12 and $55. Why the big difference you ask? Well, when a $12 credit report is run you are only getting the information from one credit bureau. When charged a fee of $45-$55 three credit bureaus are supplying data merged into one credit report combined with verification of employment and credit scores. This is the normal fee and the "Tri-merge" report is required by all lenders. Depending upon the banker or broker and their respective volume of appraisal orders, it is customary to pay between $275 to $325 for a home valued at $400,000 or less. Expect to pay $325 to $375 for a home valued more than $400,000 but less than $600,000. Above $600,000 expect a quote. The appraisal and credit report fees are nearly always collected up-front. The reason for this is that if a borrower decides to cancel the transaction the appraiser and credit reporting company will not risk going un-paid. Some lenders view these fees being paid by the borrower as a sign of good faith that they are sincere about proceeding with the transaction. Now let's talk about broker and or banker fees. I say broker or banker because banks typically do not hold loans and service them. They sell them in bulk to secondary markets whom in turn contract out the servicing. The fees charged vary and therefore it becomes important in shopping that you specifically ask what are the company's fees and have they been included in the "Good Faith Estimate & Truth In Lending Disclosure". Processing fees typically run $300 to $400 and Loan Application fees run from $75 to $150. Most brokers and bankers charge these fees but there are exceptions. You should also see an underwriting fee, typically $325. The underwriter reviews credit history, income, assets and the appraisal to determine that the file meets Fannie Mae guidelines or other guidelines specific to selling your loan to the secondary market. Document fees are nearly typically $200 and this fee is charged for drawing the loan documents that you ultimately sign at the Title Company. Tax Service is never more than $70, a fee charged to inform the lender if property taxes become delinquent. Wire Transfer is $50 and is the way all lenders safely transfer mortgage funds. Flood Certification is $29 paid by the lender to an agency that checks FEMA maps to see if the property is in a flood zone. Flood Certification, you say?!?! I live on the top of a hill! Hey, you know you do and I know you do, but the buying lender back East somewhere doesn't and they want to know your property is not in a flood zone. If it does fall within a flood zone you will be required to provide flood insurance. If you are refinancing, a Demand Fee is usually charged by your current lender in order to tell the new lender how much exactly it takes to pay the old loan off. This ranges from $50 to $150. In addition, you will typically pay one point (or 1%) of the loan amount in a loan fee. Even if you do not pay points a fee is still being paid by you, it is just being reflected in the interest rate being higher. A general rule of thumb is for every _ point you pay in points, your interest rate will be lower by 1/8% (or .125) in the rate. When you choose not to pay points the one point being paid (to the lender, bank or broker) is known as POC (Paid Out of Closing) and shown on the Title Company's HUD-1 closing statement. It used to be that it made no difference what Title Company you went to. No more. Competitive companies are charging flat fees for their Escrow Fee that range around the $300 mark. Title insurance for a buyer is based on the purchase price and is a one time. Title insurance for the lender is based on the coverage amount which, generally speaking is the loan amount. You pay this fee when you purchase the property and you will purchase another policy for the new lender if you refinance in the future. Other fees you may have to pay include courier and Fed X fees. So which lender do you go with now that I have thoroughly confused you? The "APR" (annual percentage rate) on the "Truth In Lending Disclosure" gets you close but by federal law is not all inclusive since different states do not have identical fees across the country. And, since brokers and bankers have different fees it becomes even more complex. There is an easy solution however. Ask your loan agent to include ALL "non-recurring" closing costs in their calculation of the "Good Faith Estimate" and "Truth In Lending Disclosure", not just the ones required by law. This way your APR (or your true cost reflected in the form of a percentage) is an accurate reflection of all the fees. < Read Another Article

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