August 26, 2002
Good question, but unfortunately there is such a wide range of fees charged on mortgages, whether refinance or purchase, it is difficult to point to an average.
Disregarding "points" paid to bring down the interest rate, I would guess that you might consider about 1% of the proposed loan amount being reasonable and more than enough for miscellaneous costs. One percent of $250,000 or $2,500 should be very adequate for an estimate and cover any charge by the lender for appraisal, credit, processing or underwriting, tax service, and prepaid interest on your new loan, plus include what might be necessary for escrow, title and recording charges.
Many mortgage lenders offer a program with no or very little closing costs, wrapping them into the origination points or absorbing them to gain the business. Conversely, many charge a double set of fees because they might be brokering the loan to a closing lender. It definitely depends on the loan you requested and the interest rate you have been promised. Your loan-to-value and personal qualifying information will also be important; some transactions require a full appraisal, for example, some a driveby, some none at all. This can be a cost savings, as can other aspects of the loan being processed.
A lender is only required to give an estimate under the rules of the Real Estate Settlement Procedures Act because it is intended to be a "shopping" tool. Way too often it is a gimmick to get people in the door with their loan, and then they get surprised at the closing. We see these abuses almost every day. Don't let this happen.
Get your Good Faith Estimate in writing from a company you trust, one that has been recommended to you for its honesty and integrity. And be sure that this GFE has an estimate of ALL charges that might be expected, not just the charges from your originator. Once you lock in your rate, your lender should be able to guarantee its own miscellaneous fees and have time to doublecheck any third-party fees.
There is absolutely no substitute for truthfulness. Take the time to seek out loan advisors in your community that have a reputation for standing by their word.
Copyright 2002 #145
Roxanne Carr is Division President of The Mortgage House, Inc. She has over 30 years experience in
the mortgage banking industry. Your e-mailed questions are welcomed through her website at:
www.themortgagehouse.com or call her at (800) 644-4030.