Mortgage Closing Costs

This is Part 3 in a series of guest posts about Good Faith Estimates by Kyle Pugel. Kyle is a mortgage advisor at Coldwell Banker Home Loans, who promises to do whatever it takes to ensure that one of the biggest and most important purchases you’ll ever make will also be one of your easiest. His specialties include reviewing your home loan needs with you as well as suggesting the best financing options to meet those needs.

In my last article, The Importance of a Good Faith Estimate – Part 2, I described the first category of charges on a Good Faith Estimate (GFE), the ones that cannot change once they are quoted.

Next, we’re going to take a look at the second category of GFE charges, charges that can change by up to 10%.

GFE Charges That Can Increase up to 10%

The list of required lender services can vary depending on the lender. Typical services to expect are processing fees, underwriting fees, document preparation fees, an appraisal fee, the cost of a credit report, and a scoring fee.

The individual fees a lender charges are at their discretion, based on their cost structure. Some lenders will charge all of the fees I listed above while others might only require a few of them. Since most lenders utilize automated underwriting systems to review their applicants’ credit worthiness during the pre-approval process, though, credit report fees and scoring fees should be expected at almost any lender.

There are also title services, the lender’s title insurance, government recording fees, and a few other services borrowers may shop for. The cost of the items borrowers may shop for will vary, but still only by up to 10% of the amount quoted on the GFE, as long as the borrower agrees to work with the lender’s recommended companies.

In exchange for their title service and title insurance charges, title companies provide several critical services during a real estate transaction. They ensure that clear title is conveyed from the seller to buyer and they verify there are no additional liens that would impact the new owner. Title companies also provide an insurance policy to protect the new owner’s interest in the property if someone were to come back and try to stake a claim to the property. Prior to closing escrow, your title company will also organize the signing of the closing documents and the transferring of funds to the appropriate parties.

“So what is a government recording fee all about?”

Whether a real estate exchange is closed with cash or new financing, the county where the subject property is located charges a fee to record the deed with the Recorder’s Office and make the deed a public record.

That’s a wrap on Part 3, but there is still one more category of charges on the Good Faith Estimate, which we’ll get to in Part 4! As soon as it is posted, I will update this page with a link to it. If you don’t want to miss Part 4, I recommend you subscribe to the blog using the link below or bookmark this page and check back here next week. Either way, thank you and please feel free to post any comments or questions you have about the GFE in the comments section below.

Image Credit: Bill David Brooks on Flickr. CC Licensed.