Mortgage loan origination fees are usually paid as part of closing costs, which may include the following, depending on whether the transaction is a purchase or refinance: The fee can cost anywhere between 0.5% and 1% of the total loan amount before prepaid interest points and covers the cost of processing and underwriting your loan. Lenders often treat this fee a bit like a deposit. You get it back if the loan closes, but if it doesn’t, you may lose a portion or the entire fee. That’s because lenders often apply the application fee toward covering the cost of an appraisal or credit check. If it’s not covered by the deposit or not covered in full, you’ll pay separately for the cost of any home valuation and safety check. If the lender must determine the boundaries of the property, a survey fee may roll into this. You’ll pay for the credit check at closing if it isn’t covered by your application fee. The credit report fee is typically $50 – $100, depending on the lender.Mortgage Lender Origination Fee
Application Fee
Appraisal Fee
Credit Check
Mortgage Insurance
With Federal Housing Administration (FHA) loans, an upfront mortgage insurance premium gets paid at closing. U.S. Department of Agriculture (USDA) loans charge an upfront guarantee fee or funding fee, which works similarly to mortgage insurance. In both cases, a percentage of the total loan amount is paid at closing.
If you get a conventional loan with a down payment of less than 20%, some lenders will allow you to pay for mortgage insurance upfront, effectively lowering your monthly mortgage payment.
VA Funding Fee
Department of Veterans Affairs (VA) loans don’t have mortgage insurance, but there is a funding fee that’s anywhere between 1.25% and 3.3% of the loan amount, depending on the size of your down payment, your service status, whether it’s your first time using a VA loan and whether it’s a purchase, refinance or VA Streamline. The funding fee can be paid at closing or folded into the loan amount.
Borrowers receiving VA service-connected disability benefits, eligible surviving spouses of veterans and Purple Heart recipients are exempt from paying the funding fee.
Prepaid Mortgage Interest Points
If you buy down your interest rate, you’ll pay for the points at closing. By buying down your interest rate, you can save money over time.
Title Insurance
Although this cost is usually paid by the buyer, it can be negotiated. In all cases, either the buyer or seller must pay for a lender’s title policy, which protects the lender if someone else comes along with a claim to your home. The buyer can purchase an owner’s title policy, which also covers them in case something like this comes up.
Escrow Fees
An escrow account during the closing process helps protect home buyers and sellers by ensuring the money for closing costs isn’t taken out of the account without authorization.
Settlement Agent
The settlement agent oversees the closing and serves as a notary. They must make sure you understand what you’re signing and that everything goes smoothly.
Attorney Fees
In some cases, an attorney must be present at the closing in accordance with state law.
Accrued Interest
When you close on your mortgage, during the period between closing and your first mortgage payment, your lender will usually have you pay daily interest charges until your first payment.
Homeowners Insurance
You usually pay 6 – 12 months of homeowners insurance upfront and set up an escrow account, depending on the size of your down payment.
Property Tax
You must pay up to a year of property tax when you close on your mortgage. If you’re purchasing a home, you’ll also pay a property tax research service. The service estimates your property taxes as closely as possible so you don’t end up with surprise costs. The service will also let your mortgage lender know if you miss any property tax payments.
Recording Fees And Transfer Taxes
When you buy a home, your county or other local authority must record the transaction in the public register, and you must pay for that.
Real Estate Agent Commission
With a purchase, this is typically 6% of the purchase price, which gets split between both agents. While the real estate agent’s commission is often paid by the seller, who pays is negotiable, which is why we’ve included it here.
