Mortgage Rates in Florida with EverBank
EverBank offers a number of options for home financing. The bank offers fixed rate home loans and adjustable rate home loans with competitive mortgage rates in Florida and other states.
The fixed rate mortgage loan options have varying terms and all of the fixed rate loans provide the borrower with a fixed monthly payment that will not change during the term of the mortgage loan. Many borrowers have chosen fixed rate mortgages due to their constant monthly payment but they are also the number one home loan chosen when mortgage interest rates are low.
The adjustable rate mortgages offered by EverBank offer a lower initial monthly mortgage payment and mortgage rate to fit the financial needs of borrowers who willing to accept the risk of rising rates and mortgage payments for a reduced payment initially.
Current Florida mortgage rates and loan terms offered by EverBank include:
30 year fixed rate home loan has a mortgage rate of 4.75% and an APR of 4.89%.
A fixed rate home loan on a 15 year terms has a mortgage rate of 4.125% and APR of 4.348%.
The bank offers an adjustable rate mortgage that has a mortgage rate fixed for the first five years that has a rate of 3.500% and a 3.385% APR. This is mortgage loan that has a variable rate and the monthly paymenst and interest rate may change.
Mortgage loans are available for purchases as well as refinancing existing home loans.
Mortgage rates as current as of March 9, 2010 but rates are subject to change and are not guaranteed. Florida mortgage rates and APRs are based on a single family home that is owner occupied and has a minimum 20% down payment. All mortgage loans are subject to bank approval and underwriting standards. Other restrictions and limitations on the loans listed may apply.
For more information on current mortgage rates in Florida or any other state that EverBank makes home loans or to start the mortgage application process, a mortgage representative from EverBank can be reached at 877-436-4381.
EverBank Financial Corp is a private financial services holding company headquartered in Jacksonville, Florida. EverBank operates nationally and handles consumer direct banking and lending across the U.S. The Community Banking division of EverBank serves banking customers in the Northeast Florida retail market, offering commercial and retail banking and lending products.
Tips for a Fast Home Loan Approval
As a potential home loan customer, everyone wants to search and find the best mortgage deal and the best mortgage rate that they can. It seems everyone in the market for a new home loan is looking for the best mortgage rate for the lowest costs on a loan they can have right away without delay. For some prospective borrowers that find a mortgage lender or mortgage broker that is well respected and skilled, it is likely they will not have any problems in your search.
Sometimes, however, choosing the best mortgage lender doesn’t always equal a deal that is done the most swiftly. Mortgage loans that are not completed in a timely manner may unfortunately result in higher costs. Delays may bring higher costs due to a purchase not closing on time, higher costs to pay for additional services to complete the home loan transaction or higher costs due to the expiration of a mortgage loan lock that results in a higher mortgage rate.
If your home loan is supposed to close within 30 days but it winds up taking longer you may have to pay a higher interest rate because of the delay or worse experience a lost opportunity because you didn’t get the funding in time.
It is important to be able to evaluate the services of your mortgage lender or broker so you know what the home loan approval process entails with that mortgage lender so the loan closes in a timely fashion without extra costs and headaches. The first task should be to have some knowledge about the mortgage loan process as a whole. Knowing the different steps in the mortgage process will help avoid delays and unnecessary halts in the loan process and closing.
The first part of this process is the mortgage loan application and the submission of supporting documents. If the mortgage application process is not done right, the mortgage loan approval process gets off to a rocky start that will often lead to problems and delays.
It is in your best interest to make sure that your mortgage lender or broker has all of your personal information that is needed, and that the information is accurate and correct. Often a delay can be because of simple errors that are easily avoided.
This errors may slip by because the borrower did have the accurate information to complete the loan application or supply the necessary supporting documents or the error may occur because the home loan borrower did not think it was necessary to fill in all the details on the mortgage loan application or the loan officer was more interested in getting the loan application into processing rather than making sure it was completed properly. Whatever the reason, a simple rule is that the more information there the easy the process becomes.
When you complete a mortgage loan application it is important to make sure you fill out the application completely. The mortgage loan application details, among other things, your income, assets, and a description of the home you plan to buy or refinance. The application and the supporting documents is the most important step in the home loan approval process. This is where the information is garnered to calculate income, credit and debts outstanding. A well documented application helps avoid errors and improves the speed at which the data can be verified.
The process of completing and submitting the home loan application requires documents such as W-2’s and tax returns for the last two years, pay stubs covering a 30 day period, bank statements for the last two months, the purchase contract or a mortgage statement of the mortgage loan is for a refinance. Recent credit card account statements may also be routinely required.
Here are Some Easy Steps to Submit a Complete Mortgage Loan Application:
Double check that there are no spaces or blanks left on your mortgage application before you sign.
Make sure that when you sign the agreed terms spelled out in writing are what you are expecting, and do not be afraid or be shy about asking questions before you sign.
Anything you do not understand, don’t hesitate to question your mortgage lender before you sign. If there is a delay it won’t be because you didn’t understand what the process was.
Make sure you keep copies of all the documents and important papers and have them handy to produce if required.
Make sure you have given the data requested. Stress this point with the mortgage lending institution. If you give them everything they requested, the ball is firmly in their court to close the loan.
Make sure you understand all of the mortgage loan features, what they mean, and what may be available for other home loan programs. This includes the bottom line for what you are responsible to pay. As simple as this sounds, it avoids confusion and unwanted surprises.
Before submitting a mortgage loan application, search and find the mortgage lender that will give you the best service, and offer the best quotes for a low mortgage rate on your home loan. Once you find your mortgage lender, do not hesitate to give them all the financial details they need. Give them details on assets, your income, your debt situation, and your job history. After giving your mortgage lender all the information you have to give, follow up with them frequently, and make yourself accessible should they have questions and don’t be intimidated, do your research and remember this is your request; you can control many aspects of the process.
Mortgages and Yield Spread Premiums
Abusive lending practices and an uproar over deceptive sales practices in the mortgage industry often focuses on unscrupulous tactics regarding mortgage rates and closing costs that are exploited by loan officers and mortgage lenders. One such aspect of mortgage lending deceit involves the disclosure of the yield spread premium on the good faith estimate and settlement statement for a home loan.
The issue was addressed once again when the Federal Reserve Board (the Fed) adopted a number of new rules that involve certain prohibitions regarding good faith estimates regarding mortgage rates and closing costs and for mortgages made on or after October 1, 2009.
These new rules which are a combination of the rules adopted by the Fed and others from the U.S. Department of Housing and Urban Development (HUD) ensure that consumers receive mortgage loan good faith estimates of the costs of a mortgage earlier in the mortgage application process and that the disclosures better explain the costs of the home loan and terms of the loan. The disclosures will cover areas such as the potential for monthly mortgage payments to rise, any prepayment penalty the mortgage loan may have for paying off the loan early, and any fees that may be paid by the mortgage lender to a mortgage broker for originating or bringing in the loan business. This last aspect is what the industry refers to as the yield spread premium.
Yield spread premium disclosures apply mostly to mortgage brokers but in certain cases it may also be a requirement for mortgage lenders or correspondent lenders as well.
A yield spread premium (YSP) is a payment the mortgage broker may receive from a mortgage lender when they sell or deliver the mortgage loan to the lender. A mortgage broker’s job is to facilitate the origination and processing of a mortgage loan. The mortgage broker may close the home loan in their name but ultimately the loan is funded by a mortgage lender. The mortgage lender pays the broker the difference in the mortgage rate and points that are required by the mortgage lender to fund or purchase the loan and the mortgage rate and points charged to the home loan borrower by the mortgage broker.
Technically, the yield spread premium is the dollar value of the difference between the lowest interest rate a wholesale mortgage lender would have accepted for a given mortgage loan transaction and the mortgage rate a mortgage broker induces or sells the borrower to agree upon. The greater the spread between the two mortgage rates, the higher the yield spread premium payment to the broker.
As an example, if a mortgage broker handles a borrowers request for a home loan with a rate of 5.5% and two points and the mortgage lender agrees to fund that same loan at a mortgage rate of 5.5% and 1 point, the difference between the two points charged and the one point the mortgage lender takes to fund the loan has is the brokers compensation or profit. Often the difference involves the mortgage rate and/or the points charged.
When the mortgage rate quoted by the mortgage broker is higher than the mortgage rate agreed to be the mortgage lender, the difference is the compensation to the broker which is referred to as the yield spread premium. The spread between the two mortgage rates, the rate charged the borrower and the rate the mortgage lender will agree to buy or fund the loan at, is paid as a percentage of the loan amount to the broker. If the mortgage broker quotes a very high mortgage rate of 6.50% and the mortgage lender is willing to fund or buy that same loan with a rate of just 5.00%, the yield spread premium would be very high. That is an extreme example that would not often be done. However, yield spread premiums are often a considerable amount of the mortgage broker’s income.
Many critics of the mortgage industry have charged that yield spread premiums amount to kickbacks that give brokers and other loan originators financial incentives to steer consumers to higher rate home loans. Clearly the federal government believes there are abuses with yield spread premiums as evidenced by the new disclosure rules and in fact, the issue of abuse in yield spread premiums and proper mortgage rate and cost disclosures is a topic visited by the federal regulatory agencies as well as state regulatory agencies in the mortgage lending industry regularly.
Q. What does it mean to float a rate?
A. Mortgage rates changes daily and in especially volatile markets they can change during the day. Floating or floating the rate is when you have put in a mortgage loan application for a home loan but the mortgage rate is not locked or set at a specific rate but rather floats and may vary with the daily market interest rate changes. While your mortgage rate floats, the interest rate on your home loan may go up and it may go down until the loan rate is locked. The mortgage rate must be locked prior to the closing date but it can float either by request of the loan applicant or because the applicant is ignorant about how mortgage loans and mortgage rates function. Of course, the mortgage payment will change as the mortgage rate changes.
The opposite dynamic of floating the rate is to lock the mortgage loan rate. When this happens the interest rate is fixed for that loan request for a predetermined period of time. The home loan should be settled or close during the time period covered by the loan lock or the loan lock is of no value. The loan lock can be performed at the time of the home loan application or anytime up to a few days prior to the home loan closing.
A mortgage applicant may float their loan because they believe mortgage rates are headed lower. This can be risky business, but many mortgage applicants have guessed wisely and made the assumption that mortgage rates will drop between the time they place the mortgage application and the time the loan closes and in fact the mortgage rates do fall and that new mortgage loan borrower has a lower rate.
Unfortunately, some mortgage lenders do not inform their customers about mortgage rate locks and the potential home loan borrower’s mortgage rate is floating because of this intentional lack of disclosure. When mortgage rates suddenly rise, that borrower is now going to find that their mortgage rate is higher or perhaps more loan fees how been added to the closing costs to cover the costs of obtaining the original quoted rate that is no longer available in the mortgage market.
When a potential mortgage applicant is shopping and comparing mortgage rates it is important to discuss the rate lock with the mortgage lender. Be sure to discuss how long the mortgage rate is good for. Mortgage loan locks and rate floating applies to both purchase transactions and refinances.
When you discuss the interest rate on a mortgage loan with a loan officer of a mortgage lender or bank, part of the discussion that is often left out is how long that mortgage rate is good for. Many mortgage loan officers quote mortgage rates that are short term rates. The rate difference between a long term commitment and a short term commitment may not be very much but there is a discernible difference.
Mortgage rates generally have commitment time periods of 15 days, 30 days, 45 days, 60 days and sometimes longer. If a mortgage applicant is applying for a home loan that is due to close in 40 days, a mortgage rate commitment for 15 days is essentially worthless. Loan officers sometimes quote that 15 day commitment rate because it is cheaper either with a lower mortgage rate or lower fees and this draws the customer in. Remember, the loan officer is a salesman first. Later the loan officer tells the applicant they are not locked, hopefully at the time the home loan application is filled out but often they do not tell them until the loan is ready to close. If rates fall the borrower may get a benefit and if they rise they are in for an unpleasant surprise.
Locking in a Mortgage Rate
When a consumer contacts a mortgage lender to compare mortgage rates and mortgage products, in most cases, the terms that the consumer is quoted represents the mortgage terms for that immediate time period. The mortgage rate and costs that are given will almost always be those mortgage terms that are available to borrowers settling on their home loan agreement at the time of the quote. These quoted mortgage rates and mortgage terms may not be the terms available at the mortgage loan settlement that will take place a few weeks to several weeks later.
A mortgage loan lock or mortgage rate lock is a lender’s commitment to offer a certain interest rate with any related origination or discount points for the borrower for a specified period of time. This assures that the mortgage rate will remain available while the home loan application is processed and underwritten and cover that time period from mortgage loan application to mortgage loan closing.
Sometimes you have no choice as to when you settle on a mortgage interest rate. You have your eye on a house or condominium, and you are ready to go with a quick closing time frame, so you accept the current mortgage rate or apply for an adjustable rate mortgage that usually does not have a rate lock.
But what if you can wait, and believe that mortgage rates are falling and may continue to fall, you may want to take a shot at predicting the low point of the market and get the lowest possible mortgage rate. Wall Street is thrilled when interest rates fall a quarter of one percent, so why shouldn’t you be thrilled too?
Some of the time you will be fortunate and hit at just the right moment, and other times you will miss. It’s a bit of a gamble. You may look at today’s mortgage rate, use a mortgage calculator to calculate the monthly mortgage payment and be satisfied with where your mortgage payment is now based on the current mortgage rates.
Mortgage lenders tie mortgage rates to the interest rates on mortgage backed securities. It is possible to go online and find the current prices and interest rates for mortgage backed securities however, the rates on mortgage backed securities closely follow the interest rates on ten year Treasury bonds. This is not a direct relationship but the correlation with these rates is very high. As ten year Treasury rates moves down, mortgage rates generally will too. It’s fairly easy to follow the financial markets in the newspaper, online, or on television, and you may feel comfortable watching how the Treasury markets, bond prices and interest rates work.
Changes in interest rates on mortgage bonds will usually cause quick changes in consumer mortgage rates. Home loan rates may change dramatically due to the changes in mortgage bond rates from the day a prospective home owner fills out an application for a mortgage loan to the time they take possession of the home or close on the transaction. Watching the bond market action gives you a leg up on the near future direction of mortgage rates.
So, you get approved by a lender and you believe you have their best offer. At this point you need to decide whether to lock in the interest rate or not. What risk are you taking if the rate isn’t locked. If mortgage rates rise a great deal during the mortgage application process, it could bring about a significant change in the monthly mortgage payment. If your mortgage interest rate and points are locked in, you should be protected against mortgage rate increases while your home loan application is processed.
To avoid a mortgage rate change from having an adverse impact that may increase the new payment based on this rate change to a point that a borrower may no longer qualify for the home loan program, the mortgage rate lock is a great tool. To protect against this uncertainty, mortgage lenders allow the borrower to lock-in the mortgage loan’s interest rate, guaranteeing the borrower the prevailing loan rate for a specified period of time, often 30-60 days.
This protection will generally affect the mortgage one way or another. A locked-in mortgage rate will usually prevent the home loan applicant from taking advantage of mortgage rate decreases, unless the mortgage lender is willing to lock in a lower rate that becomes available during this period. The mortgage rate lock therefore prevents mortgage rate changes that are higher and can drastically impact the cost of the home loan but also prevent the borrower from obtaining a lower mortgage rate should interest rates decrease before the mortgage loan closes. How do you decide to lock in the interest rate?
It turns out that you will probably pay more money to lock in the rate even if locking in the rate turns out to be the right thing to do. That’s because a mortgage lender will usually charge you in some way to lock in the mortgage rate. You may pay higher points, or what is called the loan origination fee, in order to lock in the low rate. Sometimes the mortgage rate is even raised a tiny bit so that you can lock it in. You pay a bit more because the mortgage lender is taking on the risk that rates could go up while the transaction is processed, so the lender could end up losing money if the loan is funded at a lower-than-market interest rate.
A thirty day interest rate lock might cost a borrower one-half of a point at closing, and a sixty day lock might cost a full point. These fees are paid at closing. If a borrower doesn’t want to pay for a lock through points, the fee can be added into the interest rate.
Most borrowers are willing to pay a small and reasonable price for the peace of mind associated with knowing what their interest rate will be at closing. However, interest rates may continue down, in which case you’ve paid a fee for no good reason.
Or have you? As the borrower you are free to go elsewhere for a loan if you don’t like the interest rate before the closing. Your mortgage lender won’t tell you, and it’s a pain to go through the entire process again, but in the long run it may be worth it. Moreover, if you decide to pull out of the arrangement, the lender may be willing to renegotiate the mortgage rate. Especially in a market where there is competition for borrowers, a lender won’t let you walk away easily. It never hurts to ask for a lower mortgage loan rate.
Once you are satisfied with the terms of a home loan you have shopped around for, you may want to obtain a lock-in agreement from the mortgage lender or broker. The lock-in should include the mortgage rate that you have agreed upon, the period the lock-in lasts, and the number of points to be paid. A fee may be charged for locking in the mortgage loan rate at this time or added on to the cost of the loan. This fee may be refundable at the home loan closing.
Tips for Avoiding Mortgage Fraud
Mortgage fraud continues to be a major problem for banks, mortgage lenders and consumers. Mortgage fraud is action that is not only investigated by local law enforcement but will be investigated by the Federal Bureau of Investigation as well. In fact, engaging in mortgage fraud can be punishable by up to 30 years in federal prison or $1,000,000 fine, or both. Mortgage fraud scams impact banks and mortgage lenders with loans that default as well the real estate profession, the economy and a significant number of individual homeowners.
Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the FBI recently commented in a press release that, “We will not stand by while real estate professionals and others exploit the financial system for their personal gain. Mortgage fraud – and the foreclosures and boarded up houses that often follow from it – has a real and significant effect on neighborhoods and property values. The FBI is working tirelessly in every part of the country to protect communities and financial institutions from the effects of mortgage fraud.”
For those consumers that are buying a new home, refinancing an existing mortgage, or searching for help to reduce their home loan debt and other debts, they could be a target of mortgage fraud by individuals and mortgage professionals.
Mortgage fraud is defined as a material misstatement, misrepresentation, or omissions relied upon by an underwriter or lender to fund, purchase, or insure a loan. The FBI puts out notices that remind individuals that it is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution.
There are two general types of mortgage fraud, fraud used to acquire property and fraud used purely for profit. Mortgage fraud that is used to purchase a home or acquire property usually involves a borrower who is committing fraud on a single home loan transaction. Often, the individual committing fraud is buying the property to occupy it and fully intends to repay the home loan. Though the intentions may not sound bad, the borrower makes misrepresentations about their income or their debts, the value of the home or falsifies data about the down payment. At times mortgage and real estate professionals are involved in assisting the home loan borrower so that they qualify for the mortgage and can purchase or refinance the home.
Fraud that is committed for the motive of turning a profit will involve mortgage or real estate industry professionals. These cases of mortgage fraud generally involve several home loans and can often be for millions of dollars. Mortgage fraud cases with professionals can be much more complex and involve issues as wide spread and complicated as having straw buyers which involves a borrower that assumes the identity of another person, property value that are fraudulently inflated, scam down payments that do not exist or are borrowed and disguised as the borrowers own funds, as well as flagrant misrepresentations including: overstating income, overstating assets, overstating collateral, fictitious employment and other related untrue facts and figures.
Some tips for recognizing and avoiding being part of a mortgage fraud transaction include:
Make sure to read and understand everything you are signing. Speak to another mortgage professional or an attorney if you need something explained. Don’t sign anything you don’t understand at anytime in the purchase, mortgage application or closing process.
Do not sign any home loan documents that contain inaccurate information, such as inflated or inaccurate income, sources of the down payment, incorrect sales price, type and length of your employment, your intent to occupy the property as your primary residence, existing debts, etc.
Don’t sign any mortgage loan documents with information left blank. Blank spaces can be filled in later by other parties to the transaction yet still has your original signature.
Know and understand the terms of the home mortgage. Check your information against the information in the home loan documents to ensure they are accurate and complete.
Do not agree to a price above your asking price. If there are any unusual circumstances regarding the purchase price, take a second look at the transaction and ask for assistance if the arrangement seems unusual. This may be particularly important if you are asked to refund the difference after the closing or if the extra money is to be used for repairs or improvements that you know are unnecessary.
Do not let someone else use your name or social security number to buy a property, especially if he or she offers to pay you for using it.
Deal directly with the mortgage lender or the mortgage broker. Do not let a third party arrange your mortgage loan.
Make sure to get a complete set of the mortgage loan and related closing documents at the time of settlement.
Review the title history to determine if the property has been sold multiple times within a short period. It could mean that this property has been flipped or bought and sold recently and the value can possibly be falsely inflated.
It is always sound advice to get referrals for real estate and mortgage professionals before filling out the mortgage loan application or signing a contract. Check the licenses of the real estate professionals and mortgage lenders involved in the transaction with the local licensing authorities.
Shopping and comparing mortgage loans and mortgage rates involves some work, don’t skimp on the process since the long term costs of a mistake can be significant.
What Is a Mortgage Refinance
Refinancing is defined as taking one mortgage loan and replacing it with another. A refinance is useful for homeowners who want to lower their mortgage payments, change the length of their existing mortgage, or taking cash out for any worthwhile purpose.
Historically, refinance transactions were used mainly when interest rates and mortgage rates were falling. Homeowners would seek to refinance at interest rate that would be below what they had on their home loan when their first bought the property.
Reducing the existing rate on a mortgage or altering the existing length of your loan is referred to as a rate and term refinance. A rate and term refinance isn’t always used by someone to lower his or her payment or change the term of the home loan. In today’s chaotic interest rate environment numerous homeowners are refinancing into fixed rate loans from adjustable rate loans regardless of what the difference in mortgage rates may be. Some homeowners make use of a rate and term refinance to avoid the rate changes coming due on an adjustable rate mortgage and merely refinance into yet another adjustable rate loan with a lower start rate.
Refinancing for additional cash to pay for bills, other loans, home improvements or any other purpose is categorized as a cash out refinance. Paying off any other debts or using the funds from the proceeds of a new refinance for any thing other than paying off the existing mortgage and the costs associated with that mortgage loan, is considered a cash out refinance. A cash out refinance requires that there be sufficient equity in the property to cover the amount of cash requested. If a homeowner has paid down their mortgage for a long period of time or if property values have risen since the time the property was purchased, the homeowner has probably built up some equity in the home that can be accessed with a cash out mortgage refinance.
Refinancing an existing mortgage loan and taking out a new home loan can yield substantial monthly savings by reducing the mortgage rate, shortening a mortgage term to build home equity faster, changing the mortgage product from an adjustable rate mortgage to a fixed rates loan or a fixed rate mortgage into a an adjustable rate mortgage or taking cash out. However, mortgage refinancing comes with a cost to obtain the new home loan. It is essential that home owners who are considering a mortgage refinance transaction evaluate both the costs and benefits before filling out a mortgage application.
No matter which refinancing option you choose be sure to research it carefully. Your refinancing decision depends on current interest rates and mortgage rates as well as your own financial needs. Compare the available mortgage loan programs, gather information, and check out online mortgage calculators to see what type of mortgage refinancing will work best for you. Take your time to decide if refinancing is right for you before starting this new home loan transaction.
Avoid Over Paying Mortgage Junk Fees
Additional fees for obtaining a home mortgage that serve no useful purpose are called junk fees. Most fees associated with originating your loan are third party fees necessary to obtain a loan approval, examples are appraisal fee, credit report fee and flood certification fee. Fees that are not necessary and are paid directly to the originating mortgage company are junk fees. Most junk fees do have one main purpose – increase the profits of the firm arranging the loan in addition to the money that make on the mortgage rate.
In order to ascertain which fees are junk and potentially profiting the originator at your expense, you have to compare the costs of the loan. One of the biggest obstacles in obtaining the least expensive loan is being able to accurately compare loan quotes. A mortgage rate quote by itself is of little value. You need the interest rate, term, costs and loan program. Clearly there is no point in comparing the rate and cost of an adjustable rate loan to a fixed rate loan with different terms. Before you attack the junk fees and question the loan officer, evaluate the different loan products and then get a mortgage rate quote with a complete break down of costs.
When you’re going through the process of applying for the loan, you will be given a variety of documents. Mandatory disclosure documents that are given out with every mortgage application make the evaluation exercise much simpler. One such document is the Good Faith Estimate that covers all the costs associated with obtaining the home loan. Federal law requires all mortgage lending institutions to provide a good faith estimate of closing costs within 3 days of the borrower filling out an application. With the Good Faith Estimate you should also receive a truth in lending notice. This is another federally mandated disclosure that spells out the mortgage interest rate over the life of the loan. These two disclosure documents, combined, are the key to evaluating the home loan fees and costs.
On the Good Faith Estimate form the costs of the loan will be itemized by category. Some lenders will charge more than others in various categories. The category of the fee is often not as important as the total amount of the fees. As an example, if lender A charges a $400.00 processing fee and lender B does not, lender A is not necessarily the better deal if lender A charges a $1000.00 origination fee and lender B charges no origination fee. Compare total costs and groups of costs as opposed to focusing on any particular fee that jumps out as being a junk fee.
The first group of fees on a Good Faith Estimate is the fees to cover the lender or originating mortgage lender for their services. This group is the category of fees with the greatest amount of room for negotiation. Here you find the charges for origination fee, discount points, appraisal fee, credit report fee, processing fee, document preparation fee, underwriting fee and perhaps other related charges. Junk fees are almost always thrown into this group. The key is compare similar loans with more than one mortgage lender. The total fees are more important than how any lender breaks them apart.
The second group is the prepaid charges. There is really no room to overcharge here, so negotiating should be irrelevant. On a purchase, the homeowners insurance may go here and the interim interest for the time you have the loan until the start of the first payment cycle would be disclosed here.
The third group is reserve or escrow deposits. These deposits are dictated by the taxing authorities and the time of the closing. Escrow are fairly well regulated, it would be difficult to find abuse in this section.
The fourth section is the title and closing charges. It is not often you will find a mortgage company that will negotiate the title charges. The primary reason being that the title company or closing company is not related to the mortgage company in most cases. If the title company is related, negotiate this fee as low as possible. Even if they are unrelated, it never hurts to complain about the amount of the charges for title insurance and closing fees.
Even though negotiating and asking questions about the closing costs can be time-consuming, you may be able to save hundreds, or even thousands of dollars at closing. Get another rate quote if necessary from a competing mortgage company. Compare the figures. Ask if the fees can be reduced. Don’t be intimidated; there are an abundance of mortgage companies looking for your business. If the loan officer won’t help you, move on and find one that will. Asking for the best mortgage rate and best terms at the lowest cost is your right.
When you get to the closing make sure the fees that were explained to you at the time of the application and placed in writing on the good faith estimate are equivalent. The purpose of the good faith document is to let you know what loan fees that you may be paying at closing. At the closing you will receive a HUD-1 settlement statement to review and sign, be sure the fees on this document are the same as the fees in the good faith estimate. If you want to question any of the fees on the HUD-1 settlement statement, do it without delay. You may feel as if you shouldn’t question these fees, but you have a right to do so and you should understand all aspects of this process with its cost.
Shop wise. Don’t accept the first offer that comes your way. Closing costs are necessary evils of closing a mortgage for either a home purchase or refinance. However, at times, they are used to increase the income of the mortgage originator or lender in a deceptive manner. It’s the job of a good loan officer to explain all of the costs to you and expect that you may shop around. A good loan officer who does his or her job right should expect that of educated borrower and accept the competition. Any amount of money that you can save at closing will be worth it.