Conventional / FHA / VA Financing:

Loan Origination Fee (1% of loan amount):

Used to cover the lender’s administrative costs.  FHA & VA limit the origination fee to a maximum of 1% of the loan amount.

Discount Points (usually % of loan amount):

One time charge by the lender to lower the note rate.  Often referred to as “points.”

Credit Report:

Covers the cost of a residential mortgage credit report (this varies from an “infile” credit report).

Appraisal Fee:

Pays for the appraisal report conducted by a state licensed and lender approved appraiser

Upfront MIP:

Fee charged by the Department of Housing and Urban Development for an FHA loan only.  For 30 year loans, the fee is 2.25% of the loan amount.  For 15 year loans, the fee is 2.0% of the loan amount.  This fee can be wrapped into the loan amount.

VA Funding Fee:

Fee charged the Department of Veteran Affairs for a VA loan only.  For an active duty veteran with 0% down, the fee is 2.0% of the loan amount.  For a qualifying reservist, the fee is 2.75% of the loan amount.  This fee can be wrapped into the loan.

Processing Fee:

Fee charged by the lender to cover the cost of the processing of the file.  (Seller cost for VA/FHA loans)

Underwriting Fee:

Fee charged by the investor to underwrite or approve the loan. (Seller cost for VA/FHA loans)

Document Preparation:

Fee charged by a document preparation company that prints the closing documents. (Seller cost for VA/FHA loans).

Tax Service Fee:

Mandatory fee charged by the investor to verify that the property taxes on the subject property are current and accurate.  (Seller cost for VA/FHA loans).

Flood Certification:

Fee charged to certify that the subject property is / is not located in a flood plain. (Seller cost for VA loans).

Title / Escrow Fees:

Title Insurance:

Insurance policies issued to the buyer and the lender to pay the insured a specific amount against any loss caused by clouds, claims or defects of title

Title Endorsements (3R, 5, 8.1):

3R:  Endorsement to the title insurance policy to guarantee that the property, the building, and any restrictions were in legal compliance by the planning and zoning commission.

5:  Endorsement that guarantees that the property address is correct.

8.1:  Environmental endorsement that ensures that the property was not built on a hazardous waste area.

Escrow Fee:

Fee charged by the title / escrow company to conduct the closing, prepare any final documents, and ensure that the proper title insurance policies are ready.

Courier/Fedex Fee:

Fee charged by the title / escrow company to cover the cost of any courier or overnight delivery charges.

Reconveyance Fee:

Fee charged by the title / escrow company to cover the cost to reconvey the seller’s mortgage.

Recording Fee:

Fee charged by the county to record the deed of trust and deed.

Affadavit of Value:

Fee charged by the county to record the Affadavit of Value

Termite Inspection:

Fee charged to hire a qualified, independent termite inspector.  Must be completed prior to closing.

SRVWUA:

Salt River Valley Water Users Association—fee charged to amend their records to reflect the change in ownership of the property

Home Warranty Plan:

Optional.  A 12 month “insurance” policy that covers the cost of repair/replacement of the major electrical, plumbing, heating, and cooling systems in a home.

HOA Transfer Fee:

Fee charged by the home owner’s association to transfer ownership to the new owner

Resale Disclosure Fee:

Usually a seller’s fee.  Charge by the home owner’s association to provide the buyer with up-to-date CC&R’s, recent minutes of the board meetings, any pro

Reserves / Impounds / Prepaids

Hazard Insurance (14 mos):

Monthly hazard insurance payment can be estimated as follows:

(Sales price x 0.004) divided by 12

Mortgage Insurance (if collected):

Mortgage insurance is a policy that protects the lender in the event that the home is foreclosed upon and the lender loses money in the process.  This is only necessary on conventional loans where the down payment is less than 20% of the sales price or on FHA loans.  It can be estimated as follows:

(Loan amount x M.I. Factor) divided by 12  

Mortgage insurance factors:

Conventional loans

FHA loans

All loan amounts:  0.005

Property Taxes:

Property taxes can be estimated by taking the sales price of the home and multiply by 0.00833.  This will give you an estimate of the monthly taxes for an owner occupied property. 

Depending upon the month that the transaction closes will determine the number of months of property taxes that are necessary for the impound account. 

Property taxes are collected by the county treasurer in September / October for the first half of the year and March / April for the second half of the previous year.

Interest:

Interest is collected upfront from the day of closing until the end of the month.  It is calculated as follows:

Loan amount x interest rate divided by 365

This will give you the daily interest charge.  Multiply this number by the number of days remaining in the month.  If this is an estimate, use 15 days.