All licensed lenders and brokers are required to provide you with a HUD Good Faith Estimate detailing the services you may be required to get and pay for in connection with your loan. In order to help you better understand the various fees associated with mortgage financing, we have included the standard definitions and fees used on the Good Faith Estimate form.

Mortgage Broker Fee:

Broker Fee:

If the company is not a Lender but a Mortgage Brokerage Business, this fee is charged by a Mortgage Broker to find a lender on your behalf.

Lender Fee:

Loan Originating Fee

This fee is charged by brokers and lenders and is the main way they are paid for their service.

Processing Fee

This fee covers the fees associated in processing a loan like entering the loan, sending out verifications of employment, etc.

Loan Discount Points

Often referred to as "points" or "discount points," this is a one-time charge from the lender that you pay to buy down the interest rate on your loan. Generally, the higher the charge, the lower the interest rate, and vice versa. Each point equals 1% of the loan amount.

Underwriting Fee

Underwriting is the name of the analysis a lender performs to determine if they are willing to lend you money and under what conditions.

Administrative Fee

This is a fee charged by the lender to cover some of their expenses. Some lenders charge this fee, while others roll this cost up into their other fees. It can range from zero to $500.

Yield Spread Premium

The yield spread premium is a payment from the wholesale lender or private investor to Gulfstream Finance Corporation for selling the loan to them. We are showing it for your information only; it is not a fee you need to pay and is not included in the closing costs.

Courier Fee

Lenders will often charge for the costs of sending documents to various parties using couriers or express mail services. These costs are generally based on actual usage and will generally be higher when the process is rushed, but some lenders may use a fixed charge. These fees generally run $25 to $50.

Wire Transfer Fee

When your loan funds, it is a common practice for the lender to wire the funds to the settlement provider (escrow holder, title company, or attorney). This is a fast and efficient way to transfer funds in a transaction where time is crucial. The receiving account charges a nominal fee for the wire transfer of $10 to $50.

Document Preparation Fee

This charge covers the cost of drafting the loan documents and is typically $175 to $350.

Homeowner's Association Certification Letter

This fee covers the cost of getting a letter from a condominium's homeowner's association that provides background information on the property. For example, they will notify the lender whether they are involved in any litigation, the number of units that are owner occupied, the number of units that are past due on fees, etc. We have estimated this cost at $75, but the fee will be set by the homeowner's association. This fee will generally only apply for purchases of a condominium, but there may be exceptions. There is no predefined line item number used for this charge, therefore, it will appear under different numbers for different loans.

Third Party Fees

Appraisal Fee

The appraisal fee covers the cost of a professional appraiser evaluating your home to estimate its fair market value. The appraisal is used to calculate the loan amount as a percentage of the property value. This loan-to-value (LTV) ratio is one of the factors that dictates whether a lender is willing to approve the mortgage application and whether additional fees may be required (e.g., mortgage insurance). The cost of the appraisal will depend on the location of your property (rural vs. urban), the complexity of the appraisal and the going rates for appraisers, which range from $275 to $750 and much higher in Commercial Real Estate.

Credit Report

This fee covers the cost of a credit report that will be used by the lender to review your credit history and help determine whether to approve your application. Although the fee may be collected by Provident Home Loans, that payment goes to the credit service agency. Because lenders require an independent credit report, we cannot reuse any prior credit reports you have. The cost of a credit report may be $60 per report.

Tax Service Fee

The lender needs to know that the property taxes are being paid in full and on time because a tax lien would take priority over their lien as a lender. This fee covers the cost of a tax service agency hired to monitor your account. If your taxes are impounded, the agency provides the lender with your tax bills so that the lender can pay your taxes on time. If you pay the taxes yourself, the agency monitors the tax rolls for the life of the loan, and informs the lender if they ever become delinquent so that they can take action to protect their lien position. This one-time fee is set by the lender, and generally runs between $50 and $120.

Flood Certification

Lenders want to ensure your property (their collateral) is well protected from likely hazards. In addition to requiring hazard insurance to cover events like a fire, they want to know if floods are of concern in your area. This fee covers the cost of a report to determine if the property is in a flood-risk area. The Federal Emergency Management Agency (FEMA) designates flood.

Settlement of Closing Fee

This fee pays for the services of the escrow or settlement agent that handles all the financial transfers and payments associated with the transaction. These fees are set by the title company and can range from $300 to $600, depending on several factors including the property value and complexity of the transaction.

Notary Fee

This fee covers the cost of a licensed notary public to certify that the individuals signing documents are whom they claim. The cost is approximately $40 to $60 and varies by title company.

Title Insurance: Owner's Coverage

Title insurance guarantees that your home has no other liens. The title company will check that no other entity has a lien, unpaid claim or other restriction on your ownership of the property. The insurance protects the owner in case a lien does exist that the search did not uncover. The premiums depend on the property value and range from 0.3% to 0.6%. The owner's policy is not necessary in a refinance situation as that policy remains in full force and effect for as long as the owner owns the property.

Title Insurance: Lender's Coverage

Lender's coverage also insures against the possibility that there is an unknown lien on your property and ensures your undisputed ownership. The difference is that it protects the lender and only insures you for the loan amount (not the entire value of the property). The premiums depend on the loan amount being insured and range from 0.15% to 0.50%.

Reconveyance Fee

The reconveyance fee covers the cost of removing your current lender's lien from your property title and it only applies when you refinance. This fee is paid to the count recorder to record the mortgage or deed of trust and the reconveyance or release, which makes the transaction a matter of public record. This fee of approximately $65 is set by and paid to your current lender.

Delivery Fee

This fee is similar to the courier fee charged by the lender, but covers the title company's costs. The fee is approximately $30.

Government Fee

Recording Fee

Once your transaction closes, your mortgage or deed of trust is recorded at the county recorder's office to make your transaction a matter of public record. The recording fee varies by the county being paid. It can run from $30 to $100 usually based on the number of pages recorded.

State Mortgage Tax

This is a tax charged by some states as an additional means of collecting tax revenues and ranges from 1.25% to 25 depending on the jurisdiction.

Search Fee

This fee covers the cost of searching the Registry of Deeds to determine if there are any other liens on your property. Often this fee is included in the title insurance fees. The fee varies widely, but is usually a few hundred dollars.

Lender Pre-Paid Items

Interest

Lenders require that you pay the interest due on the new loan from the date of funding to the time of the first monthly payment (usually the first day of the next month). The interest due is calculated using the loan's interest rate and the appropriate number of days. We have conservatively assumed a full 30 days of interest, but on average borrowers pay 15 days of interest.

Mortgage Insurance

Private mortgage insurance (PMI) is required by lenders when your loan-to-value ratio (loan amount divided by property value) is greater than 0.8 or 80%. This insurance protects the lender in case the value of your property decreases to the point where it is worth less than your loan balance. The lender typically requires that the borrower prepay two months premium. We have estimated your loan premiums using industry standard rates for the type of product you selected and your loan-to-value ratio.

Hazard Insurance Premium

The lender will require that you insure the property you are buying, since the property is collateral for the loan. At the time of closing you must pay the entire first year's premium or prove that you already have coverage (i.e., in the case of refinancing). If you are purchasing a condominium, your association policy will already cover your unit and you will not need to make this payment. The cost of hazard or homeowners' insurance depends on many factors, including location, property value, types of coverage and deductibles. We have used a standard industry estimate of 0.35% of the property value, but we recommend you consult with an insurance company for a more accurate quote.

Impound or Escrow Account Deposits

An impound (or escrow) account is an account used when the lender will be paying your homeowner's insurance and property taxes on your behalf. You repay the amounts due into the account and the lender pays the costs as they come due. The amounts normally required to be prepaid at the time of closing are: (1) two months of homeowner's insurance, and (2) the amount the lender will need to pay the property tax installment due plus a two month reserve to make additional tax payments as needed.

If private mortgage insurance (PMI) is required on your loan, you will always be required to prepay those premiums (usually two months worth). In addition, typically 1/12 of the annual premiums or installments is collected with your monthly payment on an on-going basis.