Morgage Fees Explained...

Morgage Fees Explained...

If you are reading this you may be reviewing a Loan Settlement Statement or a Good Faith Estimate (which you should receive within 3 days of applying for a morgage). Of course, these standard disclosures merely list the morgage fees but don't really explain them. If you are interested in obtaining explanations for every fee typically associated with a new home loan then please view or Morgage Good Faith Estimate page. What this page will disclose are typical fees for each of the categories of Fees associated with a home loan.

The morgage fees/Closing Costs come in these basic categories:

1. Morgage Loan Fees

This is generally where the majority of your fees will be. It can typically be up to 2% of your total loan amount and, for small loans, is often much more. For example, on a loan of $200,000 you can easily expect to have Underwriting, Processing, Origination and Administrative Fees that total $2,000 to $4,000. Please note that this is not a quote or indication of our fees but is rather intended to serve as a general guide of standard Morgage Fees.

2. Fees Paid in Advance

The amount of fees paid in advance completely depends on the closing date. The earlier in the month you close the greater the amount of interest you prepay, for example.

3. Reserves

The amount of morgage fees charged as reserves depends on both the time of the year you close as well as whether or not you have Impounds (See Glossary for a definition of Impounds'). Generally, the further away the next Property Tax due date is the more months you will have to prepay your property taxes. You may also have to prepay insurance, as well. This total amount can be significant when you consider that if you 'Impounds' at least 6 months of taxes and insurance will be paid upfront as reserves.

4. Title Charges

The amount charged for Title Insurance varies from state to state and also depends on the loan amount as well as the title company used. These fees go directly to the title company.

5. Government Charges

These are usually small amounts charged for things like recording and rarely amount to more than $100.

6. Additional Charges

These can be any fees specific to your loan or 'custom' fees of the lender/broker. If there are any fees that you do not understand question your lender/broker about them and make sure that you are comfortable before moving forward.

The only morgage fees that are tax deductible are Points, late fees and prepayment penalties

Morgage Fees Are Thoroughly Explained