Resolution Escrow Services

 

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Explanation of Closing Costs

Roll your mouse over the form at left for a detailed explanation of each section.

Section 800

This section lists the closing costs charged by the lending institution. Typical charges reflected in this section are:

  • Loan Origination Fee: a service fee charged by the lender (or mortgage broker) to the borrower that is paid at closing.
  • Loan Discount: a percentage of the loan amount charged by a lender to buy down the interest rate.
  • Appraisal: the charge for obtaining an appraisal of the fair market value of the property.
  • Tax Service Fee: the charge for the lender to set up with a third party to monitor whether your real estate taxes are paid.
  • Flood Determination: the charge for determining whether your property is located in a flood zone and whether your lender can require you to obtain flood insurance.

Section 900

This section lists items that are required to be paid in advance. Typical charges reflected in this section are:

  • Interest: this is the interest that you must prepay on your new loan from the date your loan goes into effect until the end of the month in which you are closing.
  • Mortgage Insurance Premium: certain loans will require that you prepay a certain amount of Mortgage Insurance. Mortgage Insurance is a type of insurance that insures the lender in the event that they must foreclose on the property and they do not realize enough money from the sale of the property to satisfy the outstanding balance on the mortgage. Mortgage Insurance is required for FHA loans and/or certain loans where the ratio of the value of the loan to the value of the property exceeds 80%.
  • Hazard Insurance Premium: if your hazard (or homeowner’s) insurance has not been paid for a year in advance, your lender may require that it be paid at closing.

Section 1000

This section lists the amounts collected for tax or insurance escrows to be held by the lender. If escrows are being collected as part of the loan, part of the monthly payment will include a portion of the annual real estate taxes and hazard insurance premium. Depending on when each is due, the lender must collect an initial amount so that it will have held enough to pay each item when the bill comes out.

Section 1100

This section lists the charges charged by the title company. Typical charges reflected in this section are:

  • Settlement or Closing Fee: the fee charged by the title company for conducting the closing.
  • Abstract or Title Search: the fee charged by an abstractor or title searcher to search the public records to determine the ownership of the property and whether there are any liens against the owners or property which must be satisfied.
  • Title Examination: the fee charged by the title company to review the title search.
  • Title Insurance Binder: the fee charged by the title company to prepare an initial commitment for title insurance to be provided to the lender.
  • Document Preparation: the fee charged to prepare various documents associated with the closing.
  • Title Insurance Premium: the cost of the title insurance policy to be issued in connection with the closing.

Section 1200

This section lists the recording fees and transfer and recordation taxes (if applicable) associated with recording the documents that need to be recorded among the public records.

Section 1300

This section lists any miscellaneous charges that are associated with the closing.