The Mortgage Process
How much will getting a mortgage cost?
In addition to your down payment, you will need funds to cover the associated costs of getting a mortgage. Total costs include the charges for your appraisal, tax service, survey (if necessary), deposit, closing fee, flood certificate, title commitment, and recording fees. Additional costs can also be involved in a purchase depending on the particular situation, including; points, inspection fees, pre-paid interest, taxes, insurance, and private mortgage insurance (PMI).
A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. To assist you in evaluating our fees, we’ve grouped them as follows:
Third Party Fees
Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees.
Third party fees are fees that we’ll collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and a title company or an attorney is paid the title insurance fees.
Taxes and other unavoidables
Fees that we consider to be taxes and other unavoidables include: State/Local Taxes and recording fees. These fees will most likely have to be paid regardless of the lender you choose. If some lenders don’t quote you fees that include taxes and other unavoidable fees, don’t assume that you won’t have to pay it. It probably means that the lender who doesn’t tell you about the fee hasn’t done the research necessary to provide accurate closing costs.
Lender Fees
Fees such as points, administration and escrow waiver fee (if an escrow waiver is requested and approved) are retained by the lender and are used to provide you with the lowest rates possible. This is the category of fees that you should compare very closely from lender to lender before making a decision.
Required Advances / Pre-Paids
You may be asked to prepay some items at closing that will actually be due in the future. These fees are sometimes referred to as prepaid items.
One of the more common required advances is called “per diem interest” or “interest due at closing.” All of our mortgages have payment due dates of the 1st of the month. If your loan is closed on any day other than the first of the month, you’ll pay interest, from the date of closing through the end of the month, at closing. For example, if the loan is closed on June 15, we’ll collect interest from June 15 to July 1 at closing. This also means that you won’t make your first mortgage payment until August 1. This type of charge should not vary from lender to lender, and does not need to be considered when comparing lenders. All lenders will charge you interest beginning on the day the loan funds are disbursed. It is simply a matter of when it will be collected.
If an escrow or impound account will be established, you will make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due. This type of charge should not vary from lender to lender.
Whether or not you must purchase mortgage insurance depends on the size of the down payment you make. And as a credit union member, you are eligible to receive reduced mortgage insurance rates.
If your loan is a purchase, you’ll also need to pay for your first year’s homeowner’s insurance premium prior to closing. We consider this to be a required advance.