Page 2 of Loan Estimate breaks down the closing cost involved in mortgage. Understanding them helps you save money when getting a mortgage.

Loan Estimate Page 2 – Closing Cost Details

LOAN COSTS – Mortgage Fees You MUST KNOW

Origination Charges – Costs to Start Your Mortgage

These are mandatory fees in your closing cost when applying for a mortgage through a lender or broker. They include the lender fee, broker fee, underwriting, and processing fees.

You can also choose to pay “points” to reduce your interest rate (buydown money). However, buying down your rate doesn’t always save money. Speak to a mortgage expert to see if it’s right for your situation.

Services You Cannot Shop For – Fixed Costs in Your Closing Fees

Some services like appraisal, credit report, flood certification, and tax service are assigned by your lender. You cannot choose your own provider. These services affect your closing cost, but they’re non-negotiable.

Services You Can Shop For – Your Chance to Lower Costs

This section of your closing cost lets you choose your own escrow company, title insurance, notary fees, and more. Prices vary significantly. Shopping around is a great way to save money on your mortgage. Always ask for quotes and compare options.

Opportunity to reduce closing cost from services you can shop for

OTHER COSTS – What You CAN’T IGNORE in Your Mortgage

Taxes & Government Fees 

These include recording fees and transfer taxes. While sellers may cover some transfer taxes, always double-check your closing cost section to avoid surprises.

Prepaids – UPFRONT Costs Before Moving In

Prepaids include homeowner’s insurance, property taxes, and prepaid interest. When getting a mortgage, these are amounts you must pay before moving into the home. If your closing happens mid-month, you’ll need to pay interest for the remaining days of that month.

As a result, you won’t need to make a payment for the first full month of living in the home because that interest was prepaid. Prepaids can significantly increase your closing cost. Be sure to plan your finances carefully when getting a mortgage.

Escrow Payments & Other Optional Fees

An initial escrow payment is usually required if you choose to include insurance and taxes in your monthly mortgage payment. There is also an Owner Title Insurance fee, which is sometimes paid by the seller.

However, this isn’t always the case. Carefully review this in the Closing Cost section to avoid confusion, or consult a specialist before getting a mortgage.

Total closing cost – Understanding the Grand Total

Total closing cost include both loan costs and other costs. The total amount depends largely on the other costs, since loan costs are mandatory when opening a mortgage.

For mortgage loans with an impound account, total closing cost can be significantly higher. However, you can negotiate with the lender to receive a lender credit to help reduce the overall closing cost when getting a mortgage.

CALCULATING CASH TO CLOSE – What You Really Need

Cash to close is the total money you must bring at closing. It includes your down payment and any unpaid closing cost after applying credits. If you finance some fees into your mortgage, your cash-to-close amount will adjust. Knowing this upfront helps you plan your finances.

Conclusion

Page 2 of the Loan Estimate helps you understand the closing cost of your mortgage. Mastering these details prevents overpaying and reduces your financial pressure. Contact our team now for expert advice on your Loan Estimate and optimize your mortgage plan today!

Read more:

👉 Frequently Asked Questions For Selling, Buying, Investing And Mortgages: https://www.danguard.com/faq/

👉 Closing Costs Explained: What Are Closing Costs and How Much Are They? https://www.zillow.com/learn/closing-costs/ 

👉 Visit our Tiktok channel:  📹 Is a Real Estate Agent’s 3% Commission Worth It? Here’s What You Need to Know https://www.tiktok.com/@victoriamaidang/video/7398314510781664542    

👉 Essential Property Documents You NEED to Know https://www.youtube.com/watch?v=cklnmLfxSVw

👉 What You Need to Do When Moving Into a New Home? https://www.facebook.com/share/p/1BQDQ4d35G/ 

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