The mortgage lending process can be lengthy and complex at any mortgage company . With so many programs and interest rates to choose from in a home purchase loan , as a first-time buyer you need to make sure you are getting the right information from the right professionals.
Making Application and getting Pre-Qualified is your first step in the process with your mortgage company . This way you know, as a first-time buyer what you can afford, what type of home purchase loan you need, and what documentation is needed to obtain a full loan approval
You're Pre-approved, what happens next at the mortgage company ? In a home purchase loan transaction you need to provide several documents, and as a first-time buyer, you may need to complete a First-Time Buyer Class.
Once you have provided all the requested documentation to the mortgage company , and you have a written contract on the home you want to purchase, your home purchase loan is submitted to underwriting
Now that the underwriter has reviewed all the documentation, all employment and funds to close have been verified, you will receive a Final Loan Approval and will be "Clear to Close"
Banks and Mortgage companies have a fee listed as the first fee in the "Closing Disclosure" titled LOAN ORIGINATION FEE. This fee is a percentage of the loan amount, typically 1 to 1.5%. After the crash in 2008 this fee became less useful, but will still be seen on Down-Payment assistance programs because its designed to cover the extra cost of setting up the assistance program, or is a fee charged by the program administrator, and collected by the mortgage company.
Like the loan origination fee, this "Loan Discount" fee is also a percentage of the loan amount. The loan discount fee is a charge passed on to the borrower for buying the interest rate down. Mortgage interest rates are typically quoted and closed in increments of .125, or 1/8th. Next to each interest rate on a rate sheet is a price for THAT rate, THAT day. Any rate that is lower than the break even rate, also called the "PAR" rate, will have a cost associated with it, and this is the "Discount Fee." The lower the interest rate, the higher the discount fee. Discount fees are also used in calculating "APR," or Annual Percentage Rate.
These fees are collected by the lender to offset the costs of processing and preparing the mortgage loan
The Appraisal Fee is the cost that the licensed appraiser charges to go to the subject property, measure it, evaluate it, compare it to other similar homes, and determine the current resale value of the home. It is an external fee paid to an appraiser upon order and is typically the fee that is collected at application of your mortgage loan.
This is the charge/cost associated with obtaining your mortgage credit report from all 3 major credit bureau's
This is the fee charged by the closing attorney at the title agency. When you apply for a mortgage, a title search must be performed, all lines appearing on title must be identified, reconciled, released, and new ones recorded. This is for their time, knowledge, and their staff to prepare and close your mortgage loan and/or home purchase.\
This is an important "One-Time" insurance policy that is required with every mortgage loan. When the closing attorney/title company performs their title search to reveal any and all liens and owners on the title to the subject property, the title insurance policy INSURES the lender that nothing was missed and that no one could come at a later date and make claim to the ownership of the property, allowing them to take ownership without payment.
The recording fee is the charge assessed by the county courthouse for RECORDING the deed and note with the county. Transfer taxes are county and city taxes on the new deed and new mortgage that get recorded with the courthouse.
The Kyle Porter Team
Sierra Pacific Mortgage 46 Timber Creek Cordova, TN 38018 US
Copyright © 2019 The Kyle Porter Team - All Rights Reserved. Kyle Porter, NMLS#45445, Sierra Pacific Mortgage Company, Inc. NMLS# 1788, Equal Housing Lender