The number of different charges involved in buying a home is mind boggling - and it is important to know what to expect at the settlement. Although as your lender we are required to give you a Good Faith Estimate (GFE) of your settlement costs, comparing those costs with other lenders can sometimes be difficult. For that reason we ask to see the other GFEs you receive to ensure that you are comparing “apples to apples.”

There are three general categories of settlement costs:

1.

Fees to get a mortgage. This includes lender fees, origination fees and points, as well as a host of other charges involved in obtaining and processing your loan. Points are an upfront charge expressed as a percent of the loan amount (e.g., 1 point is 1 percent of the loan) and act as a way to lower your overall interest rate.

Specific lender fees can include:

• Loan Origination Fee - This is a charge for your lender's work in evaluating and preparing your mortgage loan.


• Application Fee – This charge covers the initial costs of processing your loan application and obtaining your credit report. At Meridian Residential, we include your appraisal fee in this fee. Some lenders do not – this is one of the reasons we want to help you compare our Good Faith Estimate with others you might receive.


• Appraisal Fee –Your lender will need an opinion from an independent appraiser of the market value of the home you wish to purchase.


• Survey – This fee goes to a surveying firm who will verify that your lot has not been encroached upon by any structures since the last survey conducted on the property and to ensure that the home and other structures and legally where the seller says they are. Many of our Investors do not require a survey and we can advise you of this as we get further in the process.
  


• Mortgage Insurance –This is not an insurance that covers you in the event of death or injury. Mortgage Insurance is really default insurance and is found in Conventional and Government Loans (although it’s call different things).


• Homeowner's Insurance – Insurance that protects property against loss caused by fire, some natural causes, vandalism, etc., depending on the terms of the policy. Also includes coverage such as personal liability and theft away from home. Your lender will expect you to have a policy in effect by closing.

2.

Fees to establish and transfer ownership of the property. Your lending institution is not likely to give you a loan on a house unless you can prove that the seller owns the property you want to buy. This is where title search and title insurance fees come into play. In North Carolina, the closing attorney will verify that the seller is, indeed, the owner of the property. They will obtain a title insurance policy to guard the lender against any errors that could have occurred in the searching process. The cost of the policy is usually based on the loan amount. There may also be attorney, courier fees and other charges involved in the settlement process.

3.

Fees to state and local governments. These fees include transfer, recordation and property taxes collected by local and state governments. Your taxes based on the assessed value of the home, which you pay for community services such as schools, public works, and other costs of local government. Taxes can often be paid as a part of your monthly mortgage payment. In addition to this, if your property is part of a homeowners association there might be association dues which are included in your monthly escrows.