Description of Closing Costs

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1. Points - Each point is equal to 1% of the mortgage amount.  Charging points enables banks to lend mortgage funds under the current financial conditions, allowing a rate that is attractive to the borrower, while producing a yield or return, that is acceptable to the bank.  Points are a one-time charge and may be tax deductible.  They may be referred to as a "loan origination fee", "loan discount fee", or "loan commitment fee."  Most loans done by Mortgage Banks are no point loans while most loans done by Mortgage Brokers include Broker Fees. 2. NYS Mortgage Tax - The State of New York charges a tax on the amount of each mortgage, payable at the time it is recorded.  The rate varies by county.  In the Capital Region, take the loan amount multiplied by .0075, then subtract $25. 3. Title Insurance - This is insurance provided to protect the bank and borrower from any losses due to a defect in the title.  If a title search has been done in the last ten years on subject property, a reduced rate is offered. 4. Recording Fees - These fees vary slightly from county to county.  These are flat fees charged per page, for documents recorded with the county clerk, including the warranty deed and mortgage documents. 5. Bank Attorney Fee - The fee charged by the attorney representing the bank.  The attorney examines the abstract of title and the survey, records the mortgage and transfer of title, prepares all documents and coordinates the closing. 6. Private Mortgage Insurance - PMI protects the lender from losses due to default by the borrower.  This insurance is usually required on conventional loans when the down payments of less than 20% are made.  The rates will vary, depending upon the amount of the down payment and the type of mortgage insurance requested.  7. Tax Service Fee - This is a one-time fee charged to set up the servicing of the escrow account and audit of tax and insurance bills.  This fee is collected whether taxes are escrowed or not. 8. Application and Underwriting Fees - These fees cover the overhead that a bank assumes by employing personel to process and underwrite mortgage applications. 9. Appraisal Fee - Fee paid directly to the company performing the appraisal on the subject property.  Fee varies by the amount of units the property has. 10. Flood Certification - Fee paid directly to company performing a flood certification on the subject property.  Flood certification gives lender proof that the subject property is not in a flood zone.

Other closing costs may apply.  Construction loans will have additional closing costs, such as Inspection Fee, etc.  Mortgages will also have Prepayable Expenses, such as Prepaid Interest, Real Estate Taxes, Hazard Insurance, etc.  These are not considered closing costs because they are prepaid expenses and will be used for future expenses the borrower will incur, i.e. taxes, homeowners insurance, etc. Rate Lock Fee of $500 is required for most loans, but is not a fee.  It is a deposit and will be refunded at closing.  The purpose is to prevent HFF from losing money by locking rates with banks and then canceling them when a borrower withdraws their application.

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