A Guide To Closing Costs & GFE

A Complete Guide to Understanding Closing Costs and the Good Faith Estimate
Sponsored by
Broadview Mortgage Corporation
1-866-667-6724

Understanding Closing Costs & GFE
Topics We Will Cover In This Class
The original intention behind providing you with a Good Faith Estimate - GFE
A Complete Breakdown of typical costs involved in Purchase and Refinance transactions
Common signs of inaccurate or incomplete Good Faith Estimates
The Dangers of Shopping for Interest Rate

Ask Questions throughout presentation
You may type questions in at any time during the presentation – Question and Answer box on your screen / Control panel
Specialists are standing by to answer your questions during the presentation
This is an interactive learning environment. You will get the most value by having your specific questions answered
The only dumb question is the one you don’t ask
Write number down now in case you get disconnected
1-866-667-6724

Disclose to the consumer the types of typical costs that can be included in a mortgage finance transaction
The GFE does not required lenders to disclose the actual costs of your specific loan scenario
There is a disclaimer on every Good Faith Estimate that reads as follows:

The information provided reflects estimates of the charges you are likely to incur at the settlement of your loan.
The fees listed are estimates; actual charges may be more or less. Your transaction may not involve a fee for every item listed.
The numbers listed beside the estimates generally correspond to the numbered lines contained in the HUD-1 or HUD1A settlement Statement you will receive at settlement.
The HUD-1 or HUD-1A settlement statement will show you the actual cost of items paid at settlement

Typical costs involved in Purchase and Refinance transactions
The Good Faith Estimate is broken down into 2 main sections that itemize costs and fees
Estimated Closing Costs
Estimated Reserve/Prepaid Costs
Within each section individual costs are broken down by “series number”
Specific costs will be assigned to accompanying “number” regardless of GFE format

Fees found under - Estimated Closing Costs
800 – Items Payable in Connection with the Loan
801 – Origination Fee @ _____% + _______
802 – Discount Fee @ ______% + _______
803 – Appraisal Fee
804 – Credit Report
805 – Lender’s Inspection Fee
806 – MI Application Fee
807 – Assumption Fee
808 – Mortgage Broker Fee
809 – Tax Servicing Fee
810 - Processing Fee
811 – Underwriting Fee
812 – Wire Transfer Fee
813 – 823 – Miscellaneous Fees

801 – Origination Fee @ _____% + _______
802 – Discount Fee @ ______% + _______
803 – Appraisal Fee
804 – Credit Report
805 – Lender’s Inspection Fee
806 – MI Application Fee
807 – Assumption Fee
808 – Mortgage Broker Fee
809 – Tax Servicing Fee
810 - Processing Fee
811 – Underwriting Fee
812 – Wire Transfer Fee
813 – 823 - Miscellaneous Fees - CalSTRS/CalPERS
Fannie Mae (Adverse Market .25%)
Fannie Mae (Flex Underwriting .5%)
Fannie Mae (Credit / LTV %)

The fees charged by the Lender / Broker and can vary from lender to lender
Fees can be broken out into smaller fees or combined into larger fees
“ Cost” is usually pretty close from lender to lender
Fees commonly associated with loan amount
Origination Fee
Discount Fee
CalSTRS/CalPERS - Fannie mae fees

1100 – Title Charges
1101 – Settlement or Closing Fee
1102 – Abstract or Title Fee
1103 – Title Examination
1104 – Title Insurance Binder
1105 – Document Preparation Fee
1106 – Notary Fee
1107 – Attorney Fee
1108 – Title Insurance Fee

1100 – Title Charges
It is typical for the seller to choose the closing services
Escrow company
Title insurance company
Fees can vary VASTLY from Escrow to Escrow
Hundreds to Thousand difference
Refinances have lower title and escrow fees
First American Title Company Flat Rate
Title, Escrow, Notary, Recording

1200 – Government Recording and Transfer Charges
1200 – Recording Fee
1202 – Local Tax /Stamps
1203 – State Tax/Stamps
1300 – Additional Settlement Charges
1301 – Survey To:
1302 – Termite/Pest Inspection:
1303 – 1309 – Miscellaneous
Home warranty
HOA dues

1200 – Government Recording and Transfer Charges
Recording fees may vary depending on number of pages / number of loans
Miscellaneous fees are typically third party fees that can not be controlled
1300 – Additional Settlement Charges
It is common for the seller to pay for the termite inspection
HOA dues are typical when buying a condominium, townhome or a PUD

Fees found under - Estimated Reserve/Pre-paid
900 – Items Required by lender to be paid in advance
901 – Prepaid Interest ___ days @ _____
902 – Mortgage Insurance Premium
903 – Hazard Insurance Premium
904 – Country Property Tax
905 – VA Funding Fee
906 – Flood Insurance Premium
907-908 –Miscellaneous Fees
All of these fees are typical when appropriate

900 – Items Required by lender to be paid in advance
Interim interest is calculated based on day loan is due to fund to end of month
This number will not final until the loan funds
Mortgage payments are made in arrears
Hazard insurance on a GFE is typically estimated
Purchase - .25% of purchase price is typical
Refinance – taken from insurance policy
Property taxes on a GFE are typically estimated
Purchase – 1.25% of purchase price is typical
Refinance – taken from tax bill or public record

1000 – Reserves Deposited with Lender
Reserves are collected up front and held in an “Impound” or “Escrow” account
Tax reserves depend completely on time of year and first payment date
1 st half taxes are due on 11/1 and cover period of 7/1 to 12/31 – Delinquent on 12/10
2 nd half taxes are due on 3/1 and cover the period of 1/1 to 6/30 – Delinquent on 4/10
Let’s look at an Impound Schedule

Cost Summary Sections on the GFE
Total Estimated Monthly Payment
Principal & Interest
Other Financing (P&I)
Hazard Insurance
Real Estate Taxes
Mortgage Insurance
HOA Dues
Other
Closing Costs Summary
Includes seller paid or non-borrower paid costs
Total Estimated Funds Needed to Close
Let’s take a look at some actual GFEs

Common signs of inaccurate or incomplete Good Faith Estimates
No origination or Discount points listed
Closing costs missing or estimated low
Taxes and insurance estimated low
Title and Escrow fees estimated low
Careless errors and mistakes
Used to “feature” and interest rate
Let’s take a look at an example
For the purpose of budgeting - Would you rather bring in less than estimated or more?

Interest rates are determined by the markets on a daily and sometimes hourly basis
Your interest rate is not guaranteed until locked
Purchase – can not lock until you have a property address
There are many factors that go into determining your interest rate
Credit scores, Loan amount, Loan to value, Loan purpose, condominium, occupancy
Interest rate is the most abused loss leader in the mortgage industry!

The most common “excuse” that brokers, lenders and loan officers have for a change in rate is……………
“ Well, the interest rates change on a daily basis and that was the rate at the time, on that particular day”
How can you argue with that, right?
You can now!

Wrap up and Take Aways
Closing costs and interest rates do not vary greatly from lender to lender usually
Do your homework: Look to the WSJ, Times or on-line for National Mortgage Interest Rate averages
It’s better to be safe than sorry when it comes to estimating what costs could be associated with your transaction
If your lender, broker or loan officer is not explaining the costs completely…keep asking questions
Use the errrr….ummmmm….test

We are a direct Lender that specializes in CalSTRS, CalPERS, CalHFA and Community based down payment assistance programs
We are a direct Lender that specializes in FHA & VA Refinance, Streamline and Purchase loans.
We can refer you to a qualified Real Estate Agent in your area to help you search for homes
We are more than happy to be your “second opinion” if you are already working with someone
We are committed to educating and empowering homeowners - Join us for future classes

You will receive a “Thank you” email with links to the information we’ve talked about here today
Copy of power point presentation
Secure on-line loan application
Links to tools and resources we talk about in all of our classes
Dream Home Finder request
Updated information on Federal Tax Credit
Increased to $8,000 – Not paid back
Link to national averages for interest rates
A schedule of all upcoming classes

Upcoming Homebuyer Classes
Hiring a Real Estate Agent and Finding the Best Deals
A Complete Guide to the CalSTRS 80/17 purchase program
A Complete Guide to Buying Foreclosures and Short Sales
A Complete Guide to FHA Purchase Loans
A Complete Guide to the CalPERS Home Loan Program
Five 100% Financing Loans You Should Know About
Working to record and archive all classes for viewing anytime – I will keep you updated
Check back often for upcoming classes

Thank You for Attending If you enjoyed this class – Tell a friend 
For more information
1-866-667-6724
Presented by
Scott Schang
Sponsored by
Broadview Mortgage Corporation

A Guide To Closing Costs & GFE

by Scott Schang

Accessibility

Categories

Upload Details

Usage Rights

2 Embeds 6

Statistics