The Mortgage Closing
Mortgage 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.
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.
