American Brokerage

Dependable Mortgage Agents

Little Bit About Closing Costs

In order to keep closing costs to a minimum we will discuss them as 5 distinct categories:

  1. Points – The more points that you have the lower interest rate you can secure, but be aware this may not make the best deal for you. These points must be factored in into the total closing costs. Basically you can look at one point will be equal to one percent of the loan amount and should be converted into an actual dollar amount for the purpose of comparisons. Points include:
    • discount points
    • loan origination points
    • mortgage broker points
  2. Appraisal, Credit Report, Application Fees – In general, fees do not vary much between lenders.
    • residential appraisals are completed by independent appraisers ordered by the mortgage company.
    • the cost of an appraisal varies depending on state/region but will typically cost between $250 – $350
    • A credit report usually costs $50 – $80 depending on the bureau from which they are requested. Application fees are often non-refundable and used by lenders to establish a financial commitment. We at American Brokerage require no fee from the borrower.
    • including underwriting fees
    • processing fees
    • tax related
    • service fees
    • flood zone certification fees
    • funding fees
    • courier fees
    • wire transfer fees
    • document preparation fees
  3. Lender Fees – These are fees that are paid to the mortgage company or bank. Lender fees can manifest themselves in a number of different types:
    • including underwriting fees
    • processing fees
    • tax related
    • service fees
    • flood zone certification fees
    • funding fees
    • courier fees
    • wire transfer fees
    • document preparation fees
  4. Title Fees – These are fees are paid to the Title Company (a third party) which does the title work on your home. Charges include:
    • title search and abstract fees
    • settlement fees
    • title insurance policy premiums
    • survey charges
    • recording/release fees

    Many fees can add up when you use title companies but at American Brokerage, we have great working relationships with many title companies which give use the lowest fees one the market. If you are refinancing, you can be entitled to reduced title fees by providing a copy of your currently title insurance policy and also a copy of the survey of your property.

  5. Prepaid Items: Borrowers are required to prepay the following items and also to put taxes and insurance into a new escrow account with the new lender. These closing costs are actually not fees and are standard industry practices that do not vary greatly between lenders.
    • 2 – 14 months of real estate taxes.
    • 2 – 14 months of homeowners insurance. (Time of refinance)
    • 1 year homeowners insurance paid at closing. (Time on purchase)
    • Mortgage interest for the interim between your settlement date and the first the proceeding month.

Why Use a Mortgage Broker?

Q. Why use a mortgage broker?

A. Mortgage brokers represent you—the borrower—in obtaining financing from a variety of lenders, thus eliminating a need for you to apply to too many different banks.

Q. If mortgage brokers are middlemen between you and the lender, how can they save you money? Don’t you have to pay extra for using a mortgage broker?

A. Numerous Independent surveys have shown that mortgage brokers do NOT cost you more than direct lenders. In many cases they even save you money. Mortgage brokers increase competition in the market place, resulting in lower rates for everyone. Since mortgage brokers obtain their funds from a variety of sources, they allow you access to a large number of lenders. When you apply for a loan with a mortgage broker you are effectively applying for loans with all the lenders that mortgage broker is approved with.   Mortgage brokers are NOT employees of the lender, rather they are independent contractors. Mortgage brokers are free to set their own pricing. Therefore, two different mortgage brokers using the same lender can quote you different rates/points!

Q. Why do lenders use mortgage brokers?

A. It saves them time and money. The mortgage broker does all the legwork finding customers, pre-qualifying them and putting together their loan package. As a result, lenders are able to offer discounted pricing to mortgage brokers.

Q. How do mortgage brokers set pricing?

A. Pricing depends on the number of factors involved, such as Credit Rating (FICO Score)

Copyright © 2003 American Brokerage