What are Closing Statement Estimates
by Barbara P. Mulford
The Good Faith Estimate (GFE) is a report all lenders are required to give to a borrower within three days of a loan application.
This Good Faith Estimate gives all of the fees that will be charged to the borrower when the mortgage closes.
The problem with these estimates is that each bank uses their own form, so it can be difficult to compare the costs.
It is not surprising some borrowers find this confusing.
When you receive your GFE, you will have the time to examine these costs in the “Total Estimated Funds Needed to Close” section alberta mortgages. This give the all important dollar total that the borrower will have to cover.
A major fee listed here is the loan origination cost. This fee can vary widely, from smallish fixed fees, all the way to as much as 2% of the value of the loan. As you can imagine, this can be a big number, and the borrower must make sure he agrees with it.
The lender will list an appraisal charge on the estimate, and this is a legitimate expense since they have to know the value of the home. However, you can make sure it is not exorbitant by calling appraisal companies in the local area and checking the average rate. these kinds of things are why the three day review period is given.
The lender should also list the processing fees involved in the mortgage. This fee represents the labor the bank puts into the loan to get and go over the information. Sometimes these items may be listed individually as administration, copying, etc alberta mortgage. In this area, a borrower may have a little room for negotiation.
The next item to understand is the underwriting fee. This is the charge the bank sets for reviewing your application and approving the loan, based on your credit score. This is the type of information that determines whether or not the loan will be granted.
Next, review the title fees and attorney’s fees. You can choose your own closing lawyer to have control over this fee.
If there are mortgage broker commissions involved, the buyer sometimes has to pay them. There will be no broker’s fee on the statement if the lender pays the commission. If the buyer has to pay, he sometimes has some discretion in how hight they are.
Fees related to the home itself must be listed on the closing statement. Taxes and insurance may have been paid in advance, and the seller is entitled to a credit for these items.
If there are any things listed here which are not listed in your GFE, they may be combined with other charges. You are entitled to see a listing of all charges. The total of the fees listed on the GFE should be fairly accurate. To be sure of this, request a copy of the final settlement form the day before the closing so you can look it over once again.
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