Real Estate Glossary > M > Mortgage Fees Definition

Llenders and brokers will include a list of fees in their Good Faith Estimates An estimate of a loan's total costs, including interest, principal, mortgage insurance and fees, which lenders are required to provide borrowers within three business days after a borrower submits a loan application. that a borrower will pay when he closes on a home. Lenders and brokers may try to tack on extra costs, so look closely at application and processing fees that could be bogus. When working with a mortgage broker, ask them about they calculate a yield spread premium The amount a lender pays a mortgage broker to sell his borrowers a loan with a higher rate. . Each lender and broker will have their own list of fees, but here are the most common:

• Appraisal fee : the cost to have an appraisal of the home for the loan underwriter, usually around $300 – 500.
• Origination fee: The cost to create your loan, usually 1% of its total value.
• Processing fee: A fee for all the tasks involved in creating your loan such as ordering the title A legal document listing the history of ownership of the home. A title report lists all parties with a legal claim to the property, what items need to be cleared from title before the new buyer can take possession, and if there are any easements or encroachments on the property. and homeowners-insurance.
• Underwriting fee: The cost involved in verifying all your documents, title, insurance and the appraisal The estimation of a home's fair market value by a licensed appraiser based on comparable recent sales of homes in the neighborhood. Loan underwriters compare the appraisal price to the purchase price of the home to ensure that the value is equal to or greater than the purchase price. to finalize your loan. When working with a mortgage broker, make sure there isn't a charge for both a broker underwriting fee and a lender underwriting fee. A broker's processing department will send the loan to the lender for underwriting An individual working for mortgage lenders and brokers who determines whether or not a borrower's loan is approved. , so this fee should only be paid once.
• Flood certification fee: All lenders must certify that the property you are purchasing is not located in a flood zone by checking the tax records. If the property is in a flood zone, the lender requires the borrower to purchase flood insurance. Insurance that protects homeowners against losses from a flood.
• Tax service fee: A maintenance charge ensuring that tax information from the assessor's A government official responsible for determining the value of a property for tax purposes by comparing the prices of similar homes that recently sold in the neighborhood. office is sent to both the home owner and the lender.

For more information and a list of fees, check out a sample Good Faith Estimate (PDF).