- Points—each point is one percent of the loan amount. For an FHA loan, the origination fee is a percentage of the base loan amount and the discount points are based on the base loan amount plus the mortgage insurance premium.
- Document Preparation Fee—the fee the lender charges to prepare the documents that you will sign at settlement.
- Tax Service Fee—the fee charged by the lender for setting up a computerized tax paying service.
- PMI (Private Mortgage Insurance)—generally charged by lenders on conventional loans when you are making a down payment of less than 20% of the purchase price of the property.
- MIP (Mortgage Insurance Premium)—for FHA loans. This is paid in a one-time premium up front, plus monthly payments for the term of the loan.
- Origination Charge—this term includes all lender and mortgage broker fees for application, processing, underwriting, document preparation, and other fees required to originate the loan.
An escrow is money that the lender will hold until bills are received. Usually the lender holds funds in escrow to pay the hazard insurance and property taxes. To determine the monthly amount, take the annual amount of each bill and divide by twelve. The estimate sheet tells you how many months of each kind of escrow the lender is likely to require at settlement.
TITLE CHARGES AND SETTLEMENT FEES
The following services are included under the term “Title Charges”:
- Settlement—Your title company have documents prepared, conduct the settlement, coordinate with the lender and all other parties, disburse funds, record documents, procure and record releases of existing liens, issue title insurance policies and more.
- Title Search and Examination—a search and review of the public land records to verify ownership of property. This also establishes the loans and other liens that must be satisfied from the Seller’s proceeds at settlement.
- Title Binder—a binder or commitment to issue title insurance is required by your lender to be provided to them prior to closing.
- Title Insurance Premium—The amount paid for title insurance coverage based upon loan amount and purchase price. HUD requires that the premium for the lender coverage be included with the Title Charges. The premium for your coverage as owner is shown separately.
- Delivery—Lender and scheduling deadlines require documents that are part of the process to be hand-carried to and from the lender and to the courthouse.
GOVERNMENT RECORDING CHARGES
County and State Tax Stamps—The various counties and the State of Virginia each charge a transfer tax on the recording of documents for the purchase of a home. The District of Columbia and the various counties in Maryland charge varying fees for each transfer of real property.
In the District of Columbia, the transfer and recordation taxes total 2.9% of the sales price with 1.45% being charged to each party.* In Montgomery County, Maryland, there is a transfer tax calculated at $6.90/$1,000 of the purchase price up to $500,000, after which it is $10.00 per $1,000. The state of Maryland charges 1/2 of 1% for state stamps. These charges are almost always split evenly by the parties.
- Survey—the fee for a house location survey showing the location of the improvements within the boundaries of the property.
- Homeowners’ Association or Condo -minimum Fees—if applicable, this fee will usually be the next month’s fee; in addition you will reimburse the seller for the portion of the month which follows settlement.