Fees & Closing Costs
Loan Origination Fee Schedule
As an Upfront Mortgage Broker, I believe in putting my fees in writing. Because of the volume I do, and using advanced technology, I am able to pass on savings to you in the form of below market fees. Below is my standard fee schedule.
Also, please note that a Loan Origination Fee is always optional. A borrower may always choose a higher interest rate so that the lender pays the fee. This is known as a "Yield Spread Premium," or Rebate.
Loan Amount Refinance Fee* Purchase
Below $300,000 $3,000 $3,300
$300,001 - $400,000 $3,200 $3,500
$400,001 - $500,000 $3,400 $3,700
$500,001 - $600,000 $3,600 $3,900
$600,001 - $700,000 $3,800 $4,100
Over $700,000 $4,200 $4,500
* Add $300 to this Fee if there is both a 1st and a 2nd loan.
There are certain standard costs associated with getting a new loan.
As an Upfront Mortgage Broker, I will walk you through all the closing costs, both Non-Recurring and Recurring.
Non-Recurring Closing Costs
Non-Recurring Closing Costs are those costs that you only incur once when you get a new loan. They can be broken down as follows:
1. The Loan Origination Fee.
If you would like to receive the Wholesale Rate, you can choose to pay a Loan Origination Fee. That becomes the compensation to me as your mortgage broker. Here is the link showing you my fee schedule. This is purely optional. Alternatively, you can choose a slightly higher interest rate, known as the "Retail Rate," so that my compensation comes from the lender. This is known as the "Yield Spread Premium," or "Rebate." Since my compensation is fixed, it does not matter to me which rate you choose. My job is to help you do what is best for you.
Having said that, most people choose to pay a Loan Origination Fee (LOF) because they save money over time by enjoying the lower, wholesale rate for many years. I have developed a spreadsheet which helps you make the decision to see which interest rate and corresponding price makes the most financial sense for you. Here is the link to that spreadsheet.
2. Other Non-Recurring Closing Costs (NRCCs)
Here is a list of the most significant NRCCs for any loan. These are standard and necessary closing costs that are paid to 3rd parties, like the lender and the title company. These costs are paid out of escrow to the companies who perform loan related services. Please note that they are not negotiable, no matter what you may have read in books written by so-called "experts." Most experts are trying to sell books, and are not up to date on recent changes in the industry. Since the mortgage meltdown, many changes have occurred. The industry is much more regulated now. No one can collect a fee for a service that is not performed, and overcharges are illegal, not to mention unethical.
As an Upfront Mortgage Broker, my total and only compensation is agreed to before the loan starts either in the form of a Loan Origination Fee or that same amount to be paid by the lender in the form of a rebate. I do not profit in any way from any other NRCCs. They are necessary costs of the loan and I simply pass them on.
Here is the list of the major items:
1. Underwriting Fees. These are charged by the lender. They are fixed. Average underwriting fees are now between $800 and $950. I have no influence over these.
2. Title Insurance, and Other Escrow Fees. These fees are charged by the Title Company. Title Companies are heavily regulated, and fees charged must be consistent to all borrowers. Fees cannot be waived - otherwise an audit can uncover favoritism, which could bring rise to a class action suit. Please do not ask me to waive these fees, as they are totally out of my control. Everyone pays these - even me! The mortgage industry is very competitive -so it is in my best interest to find a Title Company that is as competitive as possible.
3. Loan Processing: This is a 3rd party fee paid to an outside company to process the loan. Standard charges are $550 to $695. I have found a company that only charges $550 and is outstanding. Loan processing is much more time-consuming and technical now than ever before. This fee must be paid, and cannot be waived or reduced.
4. The Appraisal. This is a 3rd party fee that is now charged by Appraisal Management Companies per the new HVCC law. The AMC my preferred lender uses charges $434.
Recurring Costs, on the other hand, are those costs that you pay at the time you close your new loan, but they are costs that continue on a recurring basis. For example, they include pre-paid interest your lender charges, any pro-rated property taxes you are required to pay when buying a home, and any pre-paid home insurance the lender requires also when buying a home.
When refinancing, depending on the time of the year, the lender may require that your property taxes are current, and they may also collect 1-2 months of property insurance reserves.
Good Faith Estimate
Buyers will receive a "Good Faith Estimate" of closing costs at the time the loan application is submitted to the lender, if not before. I pride myself on being very accurate, so there should never be any "surprises" when it comes time to sign off on the loan documents. This is the commitment I make to you as an Upfront Mortgage Broker.
One final note. I strive to be as competitive as possible. If you ask me to waive any of the above fees, or wish to pay less, that means you are asking me to pay these companies out of my compensation. Simply put, that is not fair to me. The Loan Origination Fee I have set is already below market, so please respect the fact that all other NRCCs are real costs that need to be paid to other parties, and you are responsible to pay them.
To give you a feel for what the total might be, here is a typical scenario for the Non-Recurring Closing Costs for a loan of $400,000. The total does not include a Loan Origination Fee.
Lender Underwriting Fees: $940
Loan Processing: $550
Title Insurance: $625
Total Escrow Fees: $560 - $610
Administrative Fee: $100 (Charged by my company, Clarion Mortgage - I must pay this)
Note: the above may change slightly over time, so to get the most accurate number, ask for a Good Faith Estimate.