Explanation of Costs

In the early stages of the loan process, you will be given a Good Faith Estimate that shows the estimated costs associated with closing your loan. Though this is an estimate, it is completed in all Good Faith. Over the years, we have closed thousands of loans throughout the area and have become very familiar with most fees charged by the various third parties who will be associated with the loan (either purchase or refinance) transaction. While these figures may be adjusted slightly, they will be the basis for final closing costs. Below is a comprehensive list and description of possible loan fees and charges; however, not all of these fees and charges will apply to your specific loan.

Application Fee
An Application Fee may often be collected once you have made your decision to obtain your loan from Republic State Mortgage and, generally, at the time the initial government required disclosures are signed. It is used to pay for the Appraisal and Credit Report and is generally collected in lieu of such fees as described below.

Appraisal Fee
An appraisal is used to determine the value of your home and required on virtually all loans. The Appraisal Fee (or Application Fee) will be charged even if you withdraw your loan or are denied loan approval. Appraisals vary in cost from $300 to $600 depending on the location and type and size of property involved. We contract with local appraisers and always try to arrange the most timely and cost effective appraisal for you.

Credit Report Fee
Your Credit Report outlines your current liabilities and your payment history. This fee is required to obtain your Credit Report and will be charged (unless we charge an Application Fee) even if you withdraw your loan or are denied loan approval.

Loan Discount Fee
This is a one-time charge on loans with an interest rate lower than the market or “par rate". The Loan Discount is listed as a percentage of the loan amount. As the loan’s interest rate decreases, the discount points (1%=1Point) will increase.

Closing/Escrow (Settlement) Fee
This fee is charged by an escrow/title company, or attorney, for handling all the paperwork and financial aspects—including the collection and disbursement of all funds—associated with your closing. Escrow Fees will vary based on the particular title or escrow company involved, the type of transaction (purchase or refinance), the loan amount, and whether a survey, quit claim deed or subordination agreement is required. City and/or county taxes may also be charged, if applicable.

Escrow/Impound Account
In order to protect themselves against borrowers defaulting on their taxes and insurance, all lenders require that a reserve account (sometimes referred to as an Escrow or Impound Account) be established to pay your taxes, hazard insurance and mortgage insurance, if applicable. At closing, you will be required to bring in a number of month's worth of estimated taxes and insurance payments to establish reserves in the account. After reserves have been established, the lender will collect a monthly, predetermined dollar amount as part of your mortgage payment. These funds provide the pool from which the lender then pays your taxes, hazard insurance, and mortgage insurance, if applicable, on an annual basis.

Escrow Waiver Fee
If your Loan-To-Value (LTV) is 80% or less (ie: in a purchase transaction, you put 20%, or more, down), we offer the option to waive the tax and insurance reserve (Escrow/Impound) account requirements. Generally, this is a one-time fee of 0.25% of the loan amount charged at closing on the Settlement Statement. Please note that certain loan program guidelines may not allow you to waive reserves even if your LTV is 80% or less; however, this is very rare.

Flood Certification Fee
Required on all properties, this pays for a FEMA certification showing whether your property is located in a flood zone.

Hazard (Homeowner’s)Insurance Premium (Items Required To Be Paid In Advance)
In a Purchase transaction the first year’s hazard (homeowner’s) insurance coverage must be in place at the time of closing. Thus, the premium for your policy is collected as part of the closing.

Hazard (Homeowner’s)Insurance Premium (Prepaid Item)
If an Escrow or Impound account is required, a prorated amount of your annual homeowner’s insurance premium will be calculated based on the next renewal date of your policy. This, along with a similar amount for property taxes, will provide the initial funding of your escrow account. (See also Escrow/Impound Account above)

Interest (Items Required To Be Paid In Advance)
Interest must be charged from the day your loan funds to the first day of the following month. Without knowing the exact estimated closing date, we generally assume 5 days of interest for your Good Faith Estimate since most closing transactions close during the last week of the month.

Origination Fee
This is a charge by the mortgage originator for originating and placing the loan. The charge is a percentage—typically one percent throughout the industry—of the loan amount. It may be combined with any discount or rebate points charged.

Private Mortgage Insurance (Prepaid Item)
On certain types of loans, including those over 80% Loan-To-Value (LTV), Private Mortgage Insurance (PMI) is required. This protects the lender should you default on your loan. Private mortgage insurance may be collected up front and/or as part of your monthly payment.

Processing Fee
This charge pays for all of the costs associated with processing your loan. Costs may include mailing, printing, preparation, and review of all loan documents as well as credit review, automated underwriting services, and fraud detection.

Recording Fee
This fee is charged by the county government for recording your deed of trust, assignments, grant deeds, and/or other documents with the office of the county recorder. It is generally based on the number of pages of all documents to be recorded.

Reserves Deposited for Taxes & Insurance (Prepaid Items)
See Escrow/Impound Account

Reserve (Escrow/Impound) Account Waiver Charge
See Escrow Waiver Fee

Settlement Fee
See Closing/Escrow Fee

Tax Service/Certification Fee
This is a charge to obtain a certified tax history of your property, which is required by all lenders.

Title Insurance Premium
Title insurance guarantees that your home has no previous, outstanding liens or encumbrances levied against it and is required on all loans. This fee varies greatly based on property location, purchase price, loan amount, whether the loan is a first or second mortgage and whether the transaction is a purchase or refinance. There are two types of title insurance policies:

The Owner’s Title Policy provides insurance for clear title to the entire property and is based the sales price or appraised value of the home.
The Lender’s or Mortgagee Title Policy provides clear title insurance coverage to the lender only in the amount of mortgage

Underwriting/Administration Fee
The fee that is charged by the lender or investor to us when the loan is sold by RSMC.

Wire Transfer Charge
A charge for wiring your loan funds to the settlement agent so they are available once the closing documents have been signed by all parties and all other conditions of the closing have been satisfied.