What are included in your closing costs? What are pre-paids & are they different from closing costs?
Empire of America discloses all closing costs online, and you may view a breakdown of all closing costs 24/7 online on our instant rate quote engine. We guarantee these closing costs, and work closely with our service providers to ensure their charges for services are accurate and deliverable.
Closing Costs are “one-time costs to obtain a mortgage, paid at closing” and include the following:
- Lender Fee: An all-inclusive Guaranteed Lender Fee, which includes loan processing, underwriting, document preparation, Flood Certification, Tax Service and funding.
- Discount Points OR a Credit for Interest Rate Chosen: You may elect to pay discount points to buy down your interest rate, permanently, for the whole term of the mortgage. Or you may choose a slightly higher rate and obtain a lender credit, a cash disbursement to offset some or all of your transaction closing costs. Use our online Instant Rate Quotes (IRQ) to search for rates, points and rebates/credits.
- Appraisal Fee: An appraisal fee collected in advance for the appraisal of the subject property. Not all transaction require an appraisal, and if an inspection waiver is obtained, the appraisal expense is removed from closing costs.
- Escrow Agent and Title Insurance: Closing agent (escrow) and title insurance fees are guaranteed if you use the national service provider we contract with to provide these services in your state. You will notice that these fees are extremely competitive due to the high volume of business we deliver to these service providers.
- Government Recording Charges (only varying fee): The county recorder’s office will charge a recording fee to record your new mortgage or deed of trust. This fee changes depending on your county, and the length of pages in your deed of trust on the new mortgage. These fees will also vary if you are adding someone to title (requires a grant deed), recording a subordination, or a release of lien, in addition to your new home loan with Empire.
Note: payoff fees from your current lender on a refinance transaction may charge you a fee to produce a payoff demand, and also to record the lien release document on title once they are paid in full. These fees are customary and could be a part of the refinance cost, but not always – this cost depends entirely on borrower relationship to their current lender.
Pre-paid items required for closing are not closing costs, but are required funds that may be needed to close a transaction. They are operational expenses of home ownership or “recurring costs of homeownership, partially prepaid at closing” and include the following:
- Initial Escrow/Impound Account Deposit: If an escrow/impound account is to be established for the ongoing payment of your property taxes and homeowner’s insurance, funds will be collected at closing to make an initial deposit into the account so that sufficient funds will be available to pay these recurring expenses as they become due and payable.
- Prepaid Interest: Your mortgage payment due date will be the first of each month, if your loan is closed on any day other than the first of the month, prepaid interest will be collected at closing, calculated from the date of closing through the end of the month. As a result of this pre-payment of interest, you will not make the next mortgage payment but “skip” it.
- Note: mortgages are paid in arrears, which means on April 1st, your payment due will cover all interest due for the month of March.
- First Year Homeowner’s Insurance Premium: If your loan is a purchase transaction, your entire first year’s homeowner’s insurance premium will be collected at closing and paid to your insurance company.
Pre-paid items are the future payments of recurring costs of homeownership, and are not considered transactional expenses, however they certainly contribute to the Cash to Close that is required to close a transaction. Any leftover Lender Credit that is available after transactional costs have been covered, may be used to reduce the burden of these prepaid expenses.
- What is an ARM?
- Should I consider a loan with private mortgage insurance (PMI)?
- What is the minimum down payment required on a purchase mortgage?
- What is the maximum percentage of my home’s value that I can borrow on a refinance loan?
- What is the maximum debt-to-income ratio allowed?
- Is paying off an existing second mortgage or home equity line considered cash out?
- Can I keep my existing second mortgage or home equity line and refinance my first mortgage?
- Can Empire of America finance the purchase of a property through a short sale?
- Am I able to refinance a property that was recently listed for sale?
- What is the difference between a conforming loan, a super conforming loan and a jumbo loan?
- Can I apply before I find a property and get pre-approved?
- What is a subordination agreement?
- What is a three-day right to cancel?
- What is title insurance and why do I need it?
- What is prepaid interest?
- What is the difference between an Interest Rate and an APR?
- What should I do if I’m not sure about the annual real estate taxes?
- What steps should I take if I become a victim of identity theft?
- How can I obtain a free credit report?
- Do you have any programs that don’t require income documentation?
- What supporting documentation is required?
- How quickly can you close my loan?
- What is your rate lock policy?
- Are any fees collected when I lock?
- What if rates drop after I’ve locked?
- What happens if the loan process takes longer than my lock period?
- Can I choose a different program or rate after I’ve locked?
- Can I relock my rate if I cancel and reapply?
- If rates fall after I’ve locked, will you lower my rate?
- Should I lock or float my rate?
- What is an escrow/impound account?
- Why do you charge a Lender Fee?
- Should I pay discount points?
- What is a rebate/credit?
- Can I prepay the loan without a penalty?
- What is your minimum credit score requirement?
- How can you offer such low rates?
- Is there a fee or any obligation if I apply?