• Application, Appraisal, Credit Report and Processing Fees
• Tax Service Fees
• Bank Attorney, Escrow Agent Fees
• Points

• Title Search
• Title Insurance
• Mortgage Tax
• Survey
• Recording Fees

• Per Diem Interest
• Home Owners Insurance
• Private Mortgage Insurance

• Real Estate Taxes
• Home Owners Insurance

• Your Attorney
• Engineer/Property Inspection
• Termite/Pest Inspection

Application, Appraisal, Credit Fee and Processing Fees:
When you apply for a mortgage, regardless of whether you apply to a big name bank, mortgage banker or mortgage broker, each will charge some combination of the above fees. Some lenders charge separately for appraisal, credit, processing, express mail, etc. Yet others simply charge a flat application fee that covers all. If you were to total these individual fees and compare them to an application fee that covers all, the costs should be reasonably close to each other. At Discount Funding Associates, we never charge a credit report fee or any express mail fees.
NOTE: Appraisal fees are usually paid directly to the appraiser at time of inspection.

Tax Service Fee:
Mortgage lenders will very often require that borrowers pay their real estate taxes and/or homeowners insurance monthly as part of their mortgage payment. As the borrower makes mortgage payments throughout the year, the portion alloted to taxes and/or insurance is deposited into an "escrow account" or holding account. When the real estate taxes and/or homeowners insurance is due to be paid, the bank then pays it with the money that has been accumulating in the escrow account throughout the year. To set up these accounts, monitor them for the life of the loan and insure the escrows are paid when due, the banks often hire a tax service to assist them. They charge a one-time fee of approximately seventy-five to one hundred dollars. (See Escrow section for more details.)

Bank Attorney/Escrow Agent:
In addition to both the buyer and seller being represented by an attorney at the closing, the bank will also have counsel present. The bank attorney will prepare and review closing documents as well as insure that the lender’s interests are being represented. It is the purchaser’s responsibility to pay the bank attorney’s fee, which generally ranges from $550.00 to $750.00.

Points:
Points are "prepaid interest" calculated as a percentage of the loan amount. For example, one point on a $150,000.00 mortgage is equal to $1,500.00. Very often, borrowers have the option of paying points to "buy down" the interest rate . In many circumstances, it is advantageous to pay points in order to obtain a lower rate. To determine whether paying points would be to your advantage, your mortgage professional should do an analysis of your particular transaction and situation and explain your options.

Title Search:
Almost every property has a history of ownership outlined in local public records. When a property is purchased, this history is reviewed to assure that the current seller "has good title" or, the right to sell the property. The title search will reveal any liens from a creditor or third party as well as search for property violations or missing certificates of occupancy. Your attorney will most likely have an "abstract company" (a company that performs title searches and related tasks) of preference and will order your title search from them. An entire search of a typical property on Long Island or within the five boroughs of New York City will generally cost about $300.00 to $500.00 .

Title Insurance:
Unfortunately, property records may not disclose all possible title problems or claims. When doing a title search, a lien against the property may be missed. Because of this possibility home buyers are required to purchase title insurance. Title insurance will protect the borrower and the lender from suffering a loss should a lien or claim be discovered after the closing. Title insurance companies and premium rates are regulated by the State of New York. However, the quality of the work performed and the financial health of the companies can vary. For any given purchase price and mortgage amount, there is a set insurance premium due. Unlike most other forms of insurance, the premiums are a one-time fee paid at the closing. Once paid, the new homeowner is protected for as long as he owns the property, whether that be five years or five hundred.

NOTE: When discussing closing costs, some lenders may "under estimate" the title insurance premium in an attempt to make the total closing costs appear lower than they actually are. Remember, title insurance premiums are set by New York State and CAN NOT vary from lender to lender.

New York State Mortgage Tax:
This expense is part of the recording process and is a state tax. When obtaining a mortgage within the five boroughs of New York City, your share of the mortgage tax amounts to 1.75% of the mortgage amount minus $25.00. In Nassau and Suffolk Counties, it is 0.75% of the mortgage amount minus $25.00. This expense is paid at the closing. The lender pays 0.25% of the mortgage amount.

Survey:
A survey is a map of the property and the structures situated on the property. In order for the abstract company to insure clear title to the entire property, a survey will be required to show, among other things, that the property lines are actually where the buyers and sellers believe that they are and that any structures on the property (pool, deck, extension, etc.) are situated within the property lines. A new survey on a typical property in the New York City metropolitan area can cost approximately $400.00 to $600.00. If there is already a survey in existence, the abstract company may be able to use that in lieu of ordering a new one and do a survey inspection instead.

NOTE: Some lenders may not mention a survey on their Good Faith Estimate of closing costs at all! Remember, only the abstract company (who is doing the title search) can decide whether or not a survey is required.

Recording Fees:
After the closing takes place, the abstract company will record a new property deed at the local county clerk’s office, making it public record that the property is now owned by the new purchasers. In addition, a new mortgage will be recorded making it public record that the lender holds a lien on the property. The local county clerk’s office charges to record each document. The total charges could be approximately $150.00 to $200.00 depending on the number of pages.

Homeowners Insurance:
A few days prior to the closing, the home purchaser will be required to secure a homeowners insurance policy on the subject property. Homeowners insurance protects both the new homeowner as well as the mortgage lender against a loss due to fire, and certain other kinds of damage. It also protects the homeowner against potential liabilities such as someone tripping on your sidewalk or slipping on the ice in your driveway. Typically the purchaser may secure the policy from any insurance company he or she chooses. The costs for such policies will vary from company to company and will be dependent on the types of coverage you decide to purchase.

Per Diem Interest:
Also known as "prepaid interest", this expense is based on the day of the month the closing takes place. Once the mortgage money from the lender is received (at the closing), the lender charges interest from that moment on, until the entire balance is paid off at the end of the term. Since mortgage payments are due in arrears (your mortgage payment covers the month that just past), the lender will pick up at the closing the interest due from the closing date through the last day of the month. For example, if the closing takes place on January 10th, per diem interest will be due at the closing to cover January 10th through January 31st. The first mortgage payment would then be due March 1st, with the payment covering the month of February.

NOTE: Many lenders, in an attempt to make their "closing costs" appear lower than the competition, may only disclose on their Good Faith Estimate five or ten days worth of interest. This would appear to make that lenders "costs" lower than a lender who discloses the maximum of thirty days interest. Since it is impossible to know ahead of time what day of the month the closing will actually take place, its best for the buyer to budget for thirty days worth of prepaid interest. That way, it will be impossible for him or her to be "caught by surprise" and be short of funds.

Private Mortgage Insurance:
Buyers who make down payments less than 20 percent of the value of the house may be required by lenders, and by law in some states, to take out mortgage insurance. The policy covers the lender's risk in the event the buyer fails to make the loan payments. Premiums are typically paid annually from an escrow or reserve account, or in a lump sum at closing

Real Estate Tax Escrows:
Depending on when during the tax period you close, at the closing table, the bank will collect from one to four months worth of real estate taxes to start out the escrow account. This is done to ensure that the bank will have enough money in the escrow account to pay any tax bill when it is due. (See Tax Service Fee for more details.)

Insurance Escrows:
At the closing table, the bank will collect approximately two months worth of homeowners insurance to start the escrow account. This is done to ensure that the bank will have enough money in the escrow account to pay the insurance premium when its due to be renewed. (See Tax Service Fee for more details.)

Purchaser’s Attorney Fee:
When choosing an attorney to represent you, recommendations are often useful. Be sure the attorney you choose specializes in real estate. Choose an attorney as you would choose a doctor; you wouldn’t want a podiatrist performing open heart surgery on you. Nor would you want a trial attorney, matrimonial attorney, tax attorney or a general practitioner who doesn’t specialize in real estate, handling your real estate transaction. On average, most real estate attorneys charge between $800.00 and $1,000.00 to handle your purchase, more for complex transactions or if additional work is required. Be careful when choosing an attorney based on his fee alone! You get what you pay for! An extra hundred dollars for a good attorney is well worth the time and aggravation you otherwise may incur using a "bargain basement " attorney.

Engineer/Property Inspection:
Sometimes called an "engineer’s report", an inspection is done by a professional home inspector or engineer. He advises the borrower as to the current condition of the property. An inspection will show the status of the property’s major systems such as heating, plumbing, and electrical. It will tell you about the roof and exterior. Any structural problems should also be uncovered during the inspection. The inspection is typically done prior to signing the sales contract, since any faults uncovered may affect the buyers decision or offer. The cost of such an inspection can vary from $300.00 to $600.00.

Termite Inspection and Warranty:
A termite inspection (usually performed by a licensed exterminator,) will check for the past or current presence of termites or other wood-boring insects. As with the property inspection, this information may affect the buyer’s offer to purchase the property. If termites or termite damage is detected, the seller would normally be required to correct the damage, exterminate the insects, and provide a warranty (usually one year) against further infestation. On average, a termite inspection will cost less than $100.00.

NOTE: Since mortgage lenders typically don’t demand that you have an attorney or whether you have a property or termite inspection performed, these expenses are rarely mentioned on Good Faith Estimates. Never-the less, it would be foolish for any home buyer to not use an attorney or have these inspections done.