Mortgage Loan

Easy access to all mortgage and closing costs

by Broderick Perkins

(07/05/2010) Three documents, crucial to the homebuying transaction, give both the seller and the buyer a better fix on virtually all costs they can expect to face during the ordeal.

Including everything from the appraisal fee to the underwriter's portion of the title insurance -- as well as a sort of manual to understand how it all works -- the documents make it easier to calculate, compare and question all the costs associated with the home buying ordeal.

"This is important because whether you buy a mansion or a cottage, you want to know how much your mortgage is going to cost - not just the interest rate but all the fees and charges you'll have to pay to close the loan" as well as other homebuying costs, writes mortgage maven, Peter Miller, publisher of the Silver Spring, MD-based OurBroker.com

• 1. Under the federal Real Estate Settlement Procedures Act (RESPA), since Jan. 1, 2010, home loan originators must give you the mandated Good Faith Estimate (GFE) within three days of accepting your application.

• 2. At closing, the lender must provide borrowers with the new Settlement Statement HUD-1, the final line-by-line list of mortgage and closing costs.

• 3. Along with the GFE, you'll also receive the new "Shopping For Your Home Loan: HUD's Settlement Cost Booklet" a guidebook to walk you through the other two documents.

Follow the links and get these documents online anytime, especially before you are in the thick of buying or selling a home in today's market. Getting familiar with the documents now, can save a lot of headaches later.

Together, the new GFE and HUD-1 documents make it easier to determine if you are getting the loan at settlement that you were offered in the GFE -- and more.

• First, the three-page GFE, provided by the mortgage broker or lender, shows the loan terms and the settlement charges you will pay if you decide to go forward with a given mortgage. It explains which charges can change before settlement and which charges must remain the same.

Notably, it also contains a shopping chart and worksheets to encourage you to shop around and compare several mortgage loans and the settlement costs of each.

• Next, the HUD-1 is a complete and final list of all your charges and credits. In addition to the cost of the property, your down payment, the financed amount, your monthly payment, and loan terms, it includes your loan type, annual percentage rate (APR), points, commissions, yield spread premiums, originating fees and other loan costs as well as title and escrow fees, closing costs, tax and insurance payments, inspection fees, attorney fees, and information and costs related to rate locks and prepayment penalties -- the works.

You have the right under Real Estate Settlement Procedures Act (RESPA) to inspect the HUD-1 Settlement Statement before settlement occurs.

You should set aside a full day to see your HUD-1 document at least a day before closing, so you have time to go over all costs, eliminate surprises and ask the lender or other professionals involved any questions that might arise.

 

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