CLOSING COSTS
Following are the typical closing costs that are charged to close a mortgage with Raustin Mortgage. Not all of these costs will necessarily apply to your mortgage however. When you apply for a mortgage with us we will provide you with a signed, dated and accurate Good Faith Estimate. The Good Faith Estimate will list the various costs based on the mortgage that meets your needs.

Appraisal Fee:
An appraisal is completed by a licensed professional to confirm the accurate value of the property financed. The cost of the appraisal varies depending on the type of appraisal requested by the lender and the type of property involved.
$175 - $600

Credit Report:
The charge to obtain a credit report for the applicants of the mortgage.
$22 - $45

Tax Service Fee:
When necessary, a lender may charge a tax service fee to create an escrow account that will pay your property tax, mortgage insurance and homeowner's insurance bills.
$45 - $85

Underwriting Fee:
Most lenders charge an underwriting fee for the administrative costs to review a loan application for approval.
$175 - $450

Flood Certification:
The subject property must be inspected to determine whether or not it lies in a flood zone.
$20

Closing Fee:
In most transactions, the mortgage will "close" at a title office. The title company charges for this service.
$150 - $300

Title Insurance:
A required insurance policy that protects the lender against loss arising out of disputes over the ownership of property. Most title insurance companies charge the same premium and that cost is based on the mortgage amount and type of transaction (purchase or refinance).

Recording Fee:
The Register of Deeds charges to have the mortgage transaction recorded legally. This fee is collected by the title company at closing.
Varies; generally no more than $50.

Assignment Fee:
The cost to record the assignment of the mortgage from the broker, banker or lender to another lender that will service the mortgage. $11.

Processing Fee:
Raustin Mortgage charges this fee to cover internal costs to originate a mortgage. These costs include but are not limited to postage, overnight fees, verification of deposit fees, and additional credit report fees.
$125 - $210

Origination Fee/Broker Fee:
This fee is charged when adequate compensation from a lender is not available for a specific transaction. In most instances, we are compensated in the form of Yield Spread Premium (commission) from the lender. Origination fees are often charged on government and non-conforming mortgages. An origination fee may be charged as a percentage of the mortgage amount or as a flat fee.

Discount Point:
A discount point(s) may be paid by a borrower to lower an interest rate on a mortgage. A discount point is equal to 1% of the mortgage amount and may reduce the rate by 1/8% to ¼%.


OTHER FEES:

In addition to closing costs, there are other costs involved with a mortgage. We believe it is important for you to be aware of these expenses, and to differentiate them from closing costs.

Pre-paid Interest:
Mortgage interest is paid in arrears. This means that with each monthly mortgage payment, the borrower pays the interest on the loan for the month preceding. For example, your March payment pays the interest on the mortgage interest accrued during the month of February. In most instances, your first mortgage payment will not be due until the 1st of the second month after the closing. If the closing occurs February 15 for example, the first mortgage payment is due April 1. Pre-paid interest on the other hand is paid in advance. Again, assuming a closing on February 15, there would be 13 days of interest paid in advance (February 15 through February 28).

Prepaid interest is calculated as follows (assuming a $100,000 mortgage at 7.5% closing on February 15).

1. 7.5% / 100 = .075
2. .075 / 365 (days) = .0002054
3. .0002054 x $100,000 = $20.54 (per day)
4. $20.54 x 13 days = $267.02

As calculated, there would be $267.02 in prepaid interest in addition to the closing costs for the mortgage.

Escrow Account:
Most lenders will require you to establish an escrow account when you have less than 20% equity in your property. An escrow account is created with your funds at the time of close and maintained by the lender on your behalf. Once you close the mortgage, the tax and insurance bills will be mailed directly to your lender for payment. Each month, 1/12 of your annual homeowner's insurance premium, mortgage insurance premium (when applicable) and property taxes are deposited into your escrow account. Your monthly house payment will include these payments.

When you are required, or chose to have an escrow account, the funds necessary to establish the account are collected at the closing of the mortgage. The amounts collected vary depending on the month the mortgage closes, the type of mortgage and the due date of your homeowner's insurance. To amount collected will be calculated to ensure that sufficient funds will be in your escrow account when the various bills are due. Generally, to establish the escrow account, a two month surplus will be included.

The actual amounts required will be made available to you prior to the closing. Once a closing date has been scheduled, the title company calculates the escrow and prepares a final settlement statement (HUD1). We will then review this statement with you.

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