PA Mortgage Company Closing Fee, Loan Fee, Lender Fee Types and Definitions
Lenders charge the fees numbered in the 800's on a Good Faith Estimate (provided when you apply) and HUD-1 (provided at closing).
(Provided for Educational Purposes Only)
The fees a Pennsylvania lender typically charges are:
Finance Charges (these affect the APR and are fees paid to the lender):
Discount Points - This buys down your interest rate that the lender charges. It is optional.
Origination Fee - These are points that buy down your rate and are usually charged by a broker. If there is no broker, they will be part of the discount points. Brokers do not cost more to use. They result in less lender fees, but charge their own fees which may or may not be a very good deal. The originator is the company who took your application, but typically is not lending you their funds. This fee should be optional.
Mortgage Broker Fee - Another name for Origination Fee.
Tax Service Fee - This is to ensure you pay your taxes over the life of the loan. Many lenders do not charge this but lump it in with another fee (#6).
Flood Certification Fee - Every loan has one of these ordered to ensure your house is not in a flood zone. It is required for all loans, though the lender may pay the fee of the proceeds of fee #6.
Commitment/Funding/Processing/Underwriting/Administrative Fee - These are all the same, and are simply a charge for the lender to do what is needed to get your loan to closing. These are usually large fees of several hundred dollars. If your loan is sold, as many lenders sell all of their loans, this is a substantial part of the lenders revenue as they are not making interest off of you for 30 years, and these fees cover their operating costs associated with approving and funding new loans.
Lock In Fee - This is typically only necessary on locks over 75 days as lenders will require it to deter interest rate hedging.
Application Fee - Money you pay when you apply to cover the out of pocket and overhead expenses associated with getting your loan to closing in the event you cancel before it closes. Typically the fees paid at closing would be higher without an application fee. This costs this covers includes overnight mail, faxing, copying, telephone, and electronic underwriting fees which can be substantial. This fee is also a deterrent to weed out those borrowers who attempt to hedge the market by applying with multiple lenders, thus driving up those lenders costs, and their service down.
Third Party Loan Costs (these DO NOT increase the APR and are fees not paid to the lender):
Appraisal Fee and Credit Report Fees
We know many borrowers shop around and ask many lenders for a list of their fees. What matters in not the name of them, but the bottom line, or the total of all the lender controlled fees. Our loan fees at closing are $795 maximum total. Note that a good faith estimate states that it is an estimate only and is subject to change, so all the fee shopping is not guaranteeing anything as the fees can vary per the law, and you will not know until closing what the fees are if they are not guaranteed in writing.
