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The following are various loan fees associated with home loans. This is used to answer frequently asked questions pertaining to your loan fees.
LOAN ORIGINATION FEE
The loan origination fee covers some of the lender's administrative costs of processing your loan. It may be expressed as a percentage of  the loan (for example, 1 point is considered 1% of the home loan amount).
LOAN DISCOUNT POINTS
Loan discount points are monies paid to a lender at your loan's closing in exchange for a discount of the interest rate on your loan. Each point you pay equals 1% of the home loan amount, so for a $300,000 loan, 1 point equals $3,000.
Quite often, discount points may be tax-deductible (ask your tax advisor for specific tax information). Your FICO/credit score, loan size and payment history may also determine the points charged by the lender for your home loan.
Processing/Underwriting/Application Fees
Processing/underwriting/application fees are charged by the lender to cover the cost of processing your loan, completing your loan application and sending your file to underwriters who will evaluate the risks involved with your loan. The underwriters will then determine suitable terms and conditions of your loan.
THIRD PARTY FEES
These fees are collected for services provided by outside parties, such as an appraiser, title, or escrow company. Most lenders require some of these fees. Many of the services are regulated by various governmental agencies.
Appraisal Fee
The appraisal fee is the payment for an opinion and estimate of the value of a property. The report is prepared by a licensed professional appraiser to explain the determination of the fair market value. This fee is often paid prior to the issuance of loan documents. American Pacific Lending requires the borrower to pay for the appraisal in advance, after your loan has been pre-approved.
Credit Report Fee
The credit report fee covers the cost of the credit report used to help determine your ability to qualify for a home loan. This is usually a marginal fee and is usually paid out of your funds at closing. These reports are obtained from credit agencies and evaluate your capacity to pay debts and include your history of paying debts.
Private Mortgage Insurance
Private mortgage insurance (pmi) is an additional payment for an insurance policy that protects the lender against loss should you fail to make your home loan payments. When the amount of the new mortgage loan exceeds 80% of the value of your home, the lender usually requires this type of insurance. These costs are added to your monthly payment. The lender will typically require three months premiums to be collected in advance.
Impound Account(s)
An impound account is a reserve trust account which is held by the lender for advance payments made by the borrower for insurance and property taxes. Your lender sets up the impound account by collecting several months worth of the annual cost of your homeowner's insurance and several months worth of your yearly property taxes and any other items covered by your escrow account. At closing, you will be required to pay these amounts to fund the account. Your lender will determine how many months of taxes and insurance reserves are required to establish your new escrow account. If you had an escrow account with your previous lender required impounds, you will usually receive a refund of your existing escrow account within 30-60 days after your previous home loan has been paid.
Flood Certificate
The flood certificate covers the Federal Emergency Management Agency's (FEMA) review to determine if a home is located in a flood zone and if flood insurance is required.
Escrow
The escrow company provides the escrow services required by your lender and works closely with American Pacific Lending's processors. The escrow company is responsible for handling all the financial transfers and payments associated with the closing of your refinance loan. They will be either issuing you a check or wiring funds into your account if you are taking cash out in your refinance.
Title Fee
The title fee is for a written history of the title transactions involving the parcel of land where your home is located, including everything recorded in the public record. The title search checks for liens, unpaid claims, restrictions or other problems associated with your title.
Title Insurance
Title insurance protects you and the lender in case of an unresolved claim affecting the marketable title to your property. There are two types of policies issued, one for the lender and one for the owner.
Recording Fees
The recording fee is charged by the state and county for recording your loan documents or any liens that may appear in the public record.
Notary Fee
The notary fee covers the cost of having a licensed notary public certify the signing of your closing documents and your signature(s). American Pacific Lending contracts with licensed notaries who will bring your closing documents, at your convenience, to your home or place of business.
Pre-paid Costs
When you refinance a home, there will be some necessary charges to cover things like the interest on your loan until your first payment is due. These include the following items:
Pre-paid Interest
Pre-paid interest include both the accrued interest on your existing loan and the pre-paid interest on your new loan for the remaining days of the current month. This is because your last loan payment was for the previous month, not the current month (loan payments are paid in arrears, meaning applied to the prior month). For example, if you close on July 25, you need to pay the accrued interest from July 1-25, plus pre-pay the interest.
Hazard Insurance
Hazard insurance is an insurance policy required by your lender to protect against certain risks, such as fires, wind, or any other type of hazard covered by your policy. A regular payment for this insurance can be included in your monthly home loan payment through an escrow account as mentioned above or paid for in advance.
Property Taxes
Property taxes can either be paid by the borrower or you may choose to have your lender pay your property taxes through an escrow account as mentioned above.
What are Escrow Accounts?
Escrow accounts or "impound" accounts (also called reserves) are required if your lender will be paying your homeowner's insurance and property taxes.
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