|
 |
 |
Buying a Home: Your Offer is Accepted, Now What?
Once you and the seller reach an agreement, there are just a few more steps before you get the keys. Now that you’ve made an offer and it’s been accepted, it’s time to pull out your Good Faith Estimate.
If the home price and loan amount are similar to the original amounts on your Good Faith Estimate, you should expect the fees to be very close to the original estimate. Of course, you may see minor changes in your closing documents because some fees are estimates of services provided by other parties (i.e. appraisers and title). The fees charged by the broker or lender should be exactly as described in the initial Good Faith Estimate.
Here’s a list of legitimate fees and expenses you can expect to see on your Good Faith Estimate and final loan documents:
- Fees or points to obtain a specific rate (origination charge or discount points)
- Home appraisal fee
- Flood Certification fee (required by law)
- Credit Report fee
- Title insurance fee
- Tax Service fee, (required by law)
- Pre-Paid items, such as any advance interest, taxes and insurance to fund your reserve account.
- Closing Agent fee. If you’re using an outside closing agent, they charge a fee for their service and it’s based on where you live and the home value.
- Processing or Origination Fee—one is customary but not both. This is what your lender is charging you for the loan. For example at AmericanWest, we have a flat fee of $695, regardless of the loan amount. Some lenders base it on the price of your loan (e.g. 1% of the loan amount). Definitely ask questions if both fees are listed, as it’s generally a red flag that you are dealing with a broker.
|
We’ve provided here a list of the standard fees you can expect to pay at closing. At AmericanWest Bank these are the only fees; however some lenders and brokers have additional fees that may be legitimate. It’s important to ask about each one. For example, some lenders pass along courier and overnight mailing fees. Watch out for a warehouse or funding fee, document fees, and miscellaneous fees that were undisclosed up front. Generally these are a sign that your loan has been brokered, or your lender is adding fees to increase profit.
Finally, look closely at your final documents for any mention of a pre-payment penalty, which is common on sub-prime loans and certain adjustable rate mortgages. If you see one, do not sign the documents until you clearly understand the details because it could translate to thousands of dollars when you refinance or sell. Pre-payment penalties are used to increase the total yield to the broker or lender and do not benefit the consumer. AmericanWest does not offer products with pre-payment penalties.
If you get to closing and notice significant differences in the fees or loan agreement, ask about each one, and give the closing agent an opportunity to tell you the reason for the change(s). If the explanation is not satisfactory, you must be willing to walk away. In rare situations the loan may fall though; yet if it’s an honest mistake, the lender will work to make it right.
When you’re buying a home it’s best to work with a direct mortgage lender, like AmericanWest Bank and a local Realtor. Together this team will be watching out for your best interests so you can focus on finding your dream home!
|
|
|
