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LOAN ORIGINATION FEE - This fee covers the lender's administrative costs in processing the loan. A one-time fee often expressed as a percentage of the loan.
LOAN DISCOUNT - Often called "points", a loan discount is a one-time charge used to adjust the yield on the loan to what market conditions demand. One point is equal to 1% of the loan amount.
APPRAISAL FEE - this is a one-time fee that pays for an appraisal - a statement of property value - for the lender. The appraisal is made by an independent fee appraiser. The average cost for a single family appraisal is $400.
CREDIT REPORT FEE - This one-time fee covers the cost of the credit report that is run by an independent credit reporting agency. Currently, the cost for credit reporting is $25.00.
TITLE INSURANCE FEES - There are two title policies - a lender's title policy (which protects the lender against loss due to defects on title) and a buyers title policy (which protects you). These are both one-time fees.
MISCELLANEOUS TITLE CHARGES - The title company may charge fees for a title search, title examination, document preparation, notary fees, recording fees, and a settlement or closing fee. These are all one-time charges.
DOCUMENT PREPARATION FEE - There may be a separate, one-time fee that covers preparation of the final legal papers, including the note and deed of trust.
PREPAID INTEREST - depending on the time of month your loan closes, this charge may vary from a full month's interest to just a few days. If your loan closes at the beginning of the month, you will probably have to pay the maximum amount. If your loan closes at the end of the month, you will only have to pay a few days interest.
PMI PREMIUM - In most cases, if your down payment is less than 20% of the purchase price, you will be required to pay an up front fee for mortgage insurance (which protects the lender against loss due to foreclosure). You may also be required to put a certain amount for PMI into a special reserve account (an impound account) held by the lender.
TAXES AND HAZARD INSURANCE - Depending on the month that you close, you may be required to reimburse the seller for property taxes. You will also need to pay an entire years hazard insurance premium up front. In addition, you may be required to put a certain amount for taxes and insurance into a special reserve (an impound account) account held by the lender.
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