Gfe Line Item Explanations


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Gfe Line Item Explanations

  1. 1. PROSPERITY M O R T G A G E The Good Faith Estimate (GFE) attached is an estimate of the fees you may have to pay for the purchase of your new home – my goal is to provide an accurate reflection of the costs you will pay at settlement. The fees are listed by line item number as they will appear on your HUD-1 settlement sheet. Lender Fees 801 & 802. Origination Fees and Discount Points- These are used to buy down (lower) your interest rate. One Point is equal to 1% of the principle amount of the mortgage. 803. Appraisal Fee- This fee is only collected on FHA & VA loans – not conventional. Appraiser’s job is to determine the property value based upon similar (comparable) properties in the surrounding area, and will try to find properties with similar features, such as the number of bedrooms, bathrooms and other characteristics, that have sold and settled within the last 6 months. 804. Credit Report Fee- This fee is only collected on FHA & VA loans – not conventional. We use a “Tri- Merge” credit report, which comes from the three credit bureaus: TransUnion, Experian, and Equifax. 808-817. Processing Fee- This is a bank fee charged for the processing of your loan. The Processor’s job is to verify your employment, banking information and credit history, and then prepares the loan for underwriting. Underwriting Fee- The Underwriter’s job is to review processing’s package for accuracy and compliance with investor guidelines. Third Party Fees Application Fee- This fee is collected on conventional loans only. The Application Fee is collected to pay for services ordered at initial application - namely the Appraisal and Credit Report Fees. Administration Fee- this is a fee from the Real Estate Agent’s office. Flood Life of Loan Fee- Federal law requires us check you are not in a flood zone. Tax Service Fee- Charged on all loans by a company which oversees payment of taxes from escrow account loans or to check that taxed have been paid on loans without escrow accounts. Attorney Fees (The Title Company used is your choice as a borrower) 1101. Settlement or Closing Fee- This is what the Attorney charges to conduct the settlement. 1102. Abstract or Title Search- An examination of public records, laws, and court decisions to insure that no one except the seller has a valid claim to the property and to disclose the past and current facts regarding ownership of Real Estate. It also searches for issues like tax liens, unpaid mortgages, or covenants that could inhibit the buyer’s use and enjoyment of the property. 1103. Title Examination Fee- A person is hired to review the title search to make sure that it was done properly. 1104. Title Insurance Binder- A fee for issuing title insurance protecting both the lender and buyer prior to closing. The binder is the Title Company’s agreement to provide Title Insurance. The title must be clear for the lender to acquire first-lien position once the existing mortgage is paid off. 1108. Title Insurance- A one-time premium required by the lender for a policy that insures against any losses to the property that results from defects in the title or deed for a given piece of property. A similar policy for your protection is optional, but highly recommended. Government Fees 1201. Recording Fee- Deed- This is a fee that is charged for filing the deed to make them a matter of public record. 1202. City/County Tax Stamps- Deed- These are the taxes charged to you by the city where you purchase your property.
  2. 2. 1203. State Tax Stamp- Deed- These are the taxes charged to you by the state where you purchase your property. 1204-1205. Recordation Tax- This is the tax that is charged by the Government for taking the property out of the seller’s name and recording it in the purchaser’s name. Other Fees 1301. Survey/Plat/Improvement Certification- Measurement of land prepared by a registered Land Surveyor showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any improvements. 1302. Pest Inspection Fee- If you are choosing a VA loan a pest inspection is required – it is optional on FHA and conventional loans. 1303-1304. Capital Contribution / Condo / HOA Dues – The amount collected for the capital contribution is dictated by the homeowners association but is typically 1-2 months association fees. The Condo fee/HOA collected at settlement is a pro rata portion based on the day you settle through the end of the month. The above items are called Closing Costs. These are non-recurring costs. I estimate these costs on the high end so that you can be more financially prepared to purchase your property. Prepaid Items The following fees are designated as Prepaid Expenses. These are fees are recurring fees that are paid in advance and during the life of the loan: 901. Interim Interest - This is interest owed for the day you settle through the end of the month. Until you have a ratified contract I take a very conservative approach and assume you will settle on the 15th of the month – your estimate will reflect up to 17 days of interim interest. We can always adjust this number up or down at your preference. 902. Mortgage Insurance Premium- With the exception of FHA and VA loans, this fee can be avoided by putting 20% down or by taking out a second mortgage, which can serve as a “down payment”. Mortgage Insurance is written to protect the lender against any loss incurred by mortgage default, thus enabling the lender to lend a higher percentage of the sales price (up to 100%). 903. Fire and Hazard Insurance Premium: 1 Year- You must pay for your homeowner’s insurance 1 year in advance. 904. Flood Insurance: 1 Year- If it is determined that your property is in a flood zone, federal law requires you purchase flood insurance coverage. 1001-1004. Hazard Insurance Escrow - In addition to paying your insurance premium 1 year in advance, the bank will establish an Escrow Account for you at the settlement table. This is an account in your name where the bank has access to draw funds for the purpose of paying the hazard insurance. Property Tax Escrow: 3-13 Months- The amount of taxes collected reflects any taxes required by the jurisdiction you are purchasing in and the amount you will be reimbursing the seller for anything he has paid in advance. In MD investors are required to pay taxes annually, not semi-annually. 1009. Aggregate Accounting Adjustment- By law we are allowed to keep a cushion of 2 month’s taxes and insurance escrow. When we have determined the amount we will be collecting will be in excess of the 2 month allowable cushion we give you a credit at settlement to ensure we will be in compliance with federal law. Together, your Prepaid Items and Closing Costs total the estimated amount that you will need to bring to the settlement table. If the seller is willing to pay for some of your settlement costs, that amount will be deducted from the total on the GFE. Also deducted will be your earnest money deposit, application fee and pre-paid hazard insurance premium. I hope this helps you understand the various settlement charges involved when purchasing a home. If you have any questions, please feel free to contact me! Pam Evans & Phil Glover