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MORTGAGE BROKER FEES

In addition to lender charges, mortgage brokers may also charge their own fees. Most common is an origination charge, normally 1 percent of the loan amount. It may show up on your settlement statement as a “Mortgage Broker Fee” when you go to closing.

SETTLEMENT OR CLOSING FEE

Someone will oversee your closing. Who that party is depends on where you live. It could be an attorney or an escrow officer. Sometimes it's a closing agent.

The closer makes sure the documents are signed properly; He collects funds from the lender and disburses them to the sellers, the agents, and all the various companies involved with the closing.

When lenders send out closing papers for the buyers to sign, they do so electronically. The closer will receive and print the documents, then follow a list of official “Lenders

Instructions” that delineate exactly what is required by the buyers before the lender will send the money over for the closing. Common lenders instructions would be:

Borrower to Sign Page 4 of the Loan Application Borrower to Sign Name Affidavit Borrower to Provide Two Forms of Photo ID

And so on. After the closing agent does all the lender asks for, the closing agent will fax the required documents back to the lender who will make sure the closer did what he was supposed to do. Then, if everything is correct (and everything usually is), the lender sends the closer a “secret code” that will unlock the funds previously wired to the closer.

The closer will take those funds and disburse them to the appropriate parties — the inspector, the seller, the surveyor, and so on.

Closing fees can range from $300 to $500.

TITLE INSURANCE

Title insurance is an insurance policy that protects the buyer and lender from defects on the title report. The title report is a document that shows the history of owners of the property and who sold to whom and when.

A “dean” title report means that there are no previous claims to the unit from previous owners or heirs and that the property is free of judgments and liens. Individuals and even legal organizations may have an ownership interest in a property without being on a mortgage.

Title insurance protects the lender and the buyer by ensuring that there are no previous claims or liens.

How could a previous claim exist? There are, in fact, many ways. A husband and wife get divorced and one of the “exes” never signs any documentation releasing his claim on the house, even though in the divorce decree it says he does.

A contractor could have done some work on the property and was never paid or paid satisfactorily. There could be a lawsuit filed and a judgment filed on the unit.

Even some long-lost heir from three or four owners back could pop up and make a claim against the estate. “I'm the grandson of one of the previous owners and it says in this will that I own this house. Now get out!”

Title insurance varies wildly by state and by the type of policies offered. Some policies are as high as 1 percent of the loan amount and as low as a few hundred dollars.

 
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