When shopping for a mortgage, one of the most difficult parts of the process is being able to get an understandable and comparable list of closing costs. Quite frankly, most lenders do not make closing costs easy to understand.  Not only can the costs themselves vary greatly from lender to lender, what they call closing costs can vary also.  In many cases, the lender with the lowest rate, may not always be the lender with the best deal for you.  Shopping and comparing enables you to make an informed decision.  Rate and fees have to be considered together in finding the best financing program.  At Coastal Mortgage, we understand that.  And we want you to have all the facts and figures to compare our products and services to any other lender.  If you compare, you will see that Coastal has the most competitive rate and fee structure.  

Specifically, items paid by borrowers at closing can be grouped into four categories:

Origination/Discounts or "Points"

Lender Fees

Settlement/Title company fees

Prepaid Items

Lender Fees and Settlement/ Title company fees are non-recurring fees that are one-time costs to close your loan, as opposed to Prepaid Items for Taxes and insurance that recur year-to-year as your property taxes and insurance premiums come due.  We will examine and explain each of the four categories below.

 First, let’s look at Origination Fees and Discount Points.

1.  Origination Fees and Discount Points = Prepaid Interest

Any percentages listed on our rate sheet are for discount fees or “points.”  One point equals 1% of the amount borrowed.  A discount fee is prepaid interest on your loan and as such, may be tax-deductible (check with your tax preparer to make sure).  When comparing lenders, always compare total points including origination fees to get your “apples-to-apples” comparison.  

Now, let’s look at Coastal’s fees.

2 .       What fees does Coastal charge ?  

Coastal charges a commitment fee of $325.  This fee is inclusive of all lender fees that Coastal charges.  There are no “hidden” fees such as funding fees, underwriting fees, document preparation fees, loan submission fees, wire fees, lock-in fees, etc.  Regardless of how a lender labels their fees, fees between lenders can be compared to determine how their rates and their fees stack up to each other. 

A .  What about Appraisal Fees?  $225 – 325*

         Appraisal fees can vary depending on your location, but an accepted range for property appraisals is from $225 to $325 on average.  Appraisals are done by independent appraisers, but are ordered by Coastal.  This is a fee-for-service, and although appraisal fees vary throughout the country, Coastal has negotiated some of the lowest appraisal fees in the country.  When Coastal approves your loan application, we will charge you the appraisal fee and the appraiser will make arrangements to appraise the property.  You will receive a copy of the appraisal at your closing.

2.  Settlement Agent/Title Company Fees. 

These fees are not collected by Coastal.  To close your loan, a settlement agent, usually a title company, escrow company, or real estate attorney, is used to search the title to the property, provide a title insurance policy, and act as a clearinghouse for paying the bills of the transaction to the appropriate parties.  As these charges can vary from state to state, we allow you to choose who you want to close your loan.  In this way, you can compare settlement charges from local providers to determine which provider is best for you.  Below, we have provided an estimate of the ranges of settlement agent costs that are generally accepted.

Title Insurance - $2.00 per $1,000 borrowed

Survey - $150 to $250 (Properties over 1 acre may cost more)

Attorney/Closing Fee - $350 - $500 (your choice of closing agent)

Pest Inspection - $45 - $65 (your choice of inspection firms)

Transfer tax - varies per local municipality

Recording Fees - $35 - $55

Title Search - $125 - $275

3.       Prepaid Items for Taxes and Insurance.

Unlike the Lender Fees and Settlement Agent Costs which are non-recurring fees, Prepaid items are recurring payments that you make periodically throughout the life of your loan, such as interest, real estate property taxes, and homeowners’ insurance premiums.  These are generally known as escrow or impound items.  Most loans require an escrow account to make sure that the real estate taxes and hazard insurance amounts are paid on time when they come due.  A new escrow account will be established at the closing of your loan that you will “prepay” amounts sufficient to have enough money on hand to pay the amounts due for real estate taxes and hazard insurance premiums.  The requirements for establishing escrow accounts are generally industry standard practices and therefore do not vary greatly from lender to lender. 

The generally accepted industry standards for initial escrow deposits are:

Interim interest from the date of closing through the end of month.

The 1st year's homeowner's insurance premium paid at closing.

An additional 2 months homeowner's premium paid at closing

Up to 4 -5 months of real estate taxes paid at closing.

Please note:  Borrowers who desire to maintain their own escrow accounts can do so if the loan-to-value is 80% or less, but prior lender approval is required, and there is an additional .25% discount fee added to the cost of the loan.

Understanding closing costs, and having the ability to adequately compare one lender to another on a specific program is paramount to you as a consumer.  With the knowledge contained here you are prepared to make a reasoned and balanced decision on your mortgage lender and mortgage loan.