Glossary of Closing Costs

The mortgage world has unique terms and calculations that we feel every First Time Home Buyer should be aware of and the context that they most mortgage terms might be used. Here are the most common terms you should know if you’re seeking down payment assistance.

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Appraisal Fee

Charge to obtain a statement of property value for the lender so that the lender can know if the property value is sufficient to secure the loan.

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DOC Stamps on Deed

A revenue stamp attached to deeds, wills, and the like for payment of taxes.

DOC Stamps on Note

To the federal government due on such transactions.

Document Preparation Fee

Covers preparation of final legal papers including the mortgage, deed, etc.

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Homeowner's insurance

Protects the buyer and the lender against loss due to fire, storms and other natural disasters and hazards. It may also insure against additional risks including personal liability and theft.

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Intangible Tax on Mortgage

Fees collected when property changes hands or when a mortgage loan is made. They are set by, and paid to, state and local governments.

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Lender Inspection Fee

Covers the cost of the appraisers final inspection to ensure the home is complete.

Loan Origination Fee

Covers the lender's administrative costs in processing the loan. It is often figured as a percentage of the loan amount.

Loan Discount Fee

(Also called points): A one-time charge used to adjust the yield on the loan to what the market conditions demand. Each point is equal to one percent (1%) of the loan amount.

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Mortgage Title Insurance

Protects the lender against loss due to problems in connection with the title not identified by a title search. It is usually written for the amount of the mortgage loan.

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Owner's Title Insurance

The charge for the owners to obtain title insurance protection, protecting the owners against losses due to title problems.

P

Private Mortgage Insurance

Protects the lender from loss due to payment default by the borrower. With this insurance, the lender is willing to make a larger loan, which in turn reduces the down payment amount required. This insurance should not be confused with Mortgage Life, Credit Life or Disability Insurance, which are designed to pay off a mortgage in the event of death or disability of the borrower.

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Survey Fee

The lender requires that a surveyor conduct a property survey to determine the exact location of the home and lot lines, as well as easements and rights of way. This is done to protect both the lender and the homebuyer.

satisfaction of mortgage

A certificate that is issued by the mortgagee when a mortgage is paid in full. This document is called the release of mortgage or discharge of mortgage.

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