Lakeview Bank will provide you with the right mortgage in a straightforward and cost effective manner. The costs of getting a mortgage can vary depending on the type of loan, the loan amount, credit scores, loan to value and the lender. For example, as your loan amount increases, certain closing costs can increase, such as, title insurance, escrow fees, or origination fees, because they are based on the amount of the loan. Also, credit scores determine rates and points.
Discount points are equal to a percentage of the loan amount and represent additional money you pay to the lender at closing. If you pay more points, it will lower your rate. Usually, for each point you pay for a 30-year loan, your interest rate is reduced by about .125% of a percentage point. Paying points may be advantageous if you plan on living in the home for a long time.
Loan origination fees are charged by the lender for evaluating, preparing and submitting a proposed mortgage loan. They are expressed as a percentage, for example, a 1% origination fee for a $200,000 loan equals $2,000. Some lenders add an origination fee into their quoted points while other lenders list an origination fee in addition to their quoted points.
Appraisal fees range from $300-$500 depending on the price of the home and pay for an independent appraisal of the home you want to purchase. The appraisal is a critical factor in determining how much of a mortgage the bank will approve. After the appraisal is complete, you will be entitled to a copy of the appraisal.
There are three major national credit bureaus (Equifax, TransUnion and Experian) and they supply the lender with the information on your credit behavior.
A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes and many other documents. The purpose of the search is to make sure that the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims or outstanding restrictive covenants filed in the record that would adversely affect the marketability or value of title.
If a claim is made against the property’s title, title insurance will assure you of a legal defense and pay all court costs and related fees. You are required to obtain a lender’s title insurance policy which protects the lender’s interest in the property as security for the outstanding balance under the mortgage. There may be hidden defects in the title which an examination of the records could not reveal. Therefore, you may want the protection of title insurance by purchasing an owner’s title insurance policy. You should inquire about the seller’s title insurance policy on the property, for it may be possible for you to obtain an owner’s policy at a lower reissue rate.
The title insurance company or lender may require a survey of the property. This verifies boundaries of the property and that your lot has not been encroached upon by any structures. Costs range from $225-$400 depending on the size of the lot.
You may escrow for homeowners insurance and property taxes. The amount paid into escrow at the closing depends on how soon the next tax payment is due (in Minnesota, taxes are paid in mid May and October). There is generally a 2 month cushion for both the calculated monthly taxes and insurance amounts added to the escrow account.
A flood certification verifies that the property is not in a flood zone. If the property is located within a defined zone, the lender will require a flood insurance policy.
Recording and transfer charges cover the costs of the paperwork required to record the mortgage with the county. Mortgage registration taxes on the mortgage vary from county to county (in Dakota County, the charge is 23 cents per $100 borrowed).
Prepaid interest covers accrued interest from the closing date until the end of the month.
Below are listed an approximate range of fees generally charged:
Origination Fees:
Underwriting
$275
Wire Transfer
$20-$50
Document Preparation
$35
Origination Fee
generally 1% of the loan amount
Discount Points
generally charged in 1% of the loan amount increments
Title and Closing Fees:
Appraisal
$300-$500
Closing Fee
$250-$350
Credit Report
$15
Flood Certification
$10-$15
Pest Inspection
$50-$100
Courier Fees
$30-$50
Survey
$50-$200
Title Exam
$130-$150
Plat Drawing
$65
Name Search
$35
Assessment Search
$45
Recording Service
$30-$90
County Recording
$46 for each document in Minnesota (varies by state)
