Your credit union or organization has partnered with us to make sure that you are getting the service you deserve as well as a competitive deal. The key to understanding closing costs is to break down the closing costs into three separate categories of charges: 1) Lender Fees 2) Settlement/Title company fees and 3) Prepaid items

1) LENDER, BROKER OR BANK FEES
These are the closing costs that are paid to the mortgage company. These fees vary widely from one lender to another and can affect rates dramatically. Following are the typical closing costs in a mortgage transaction, which include Processing Fee, Underwriting Fee, Administrative Fee, Tax Escrow Fee, Wire Transfer Fee, Flood Certification Fee and Discount Points/Origination Fees.
Discount points and Origination fees- Paying points is a means for you to pay down the interest rate. Paying points can save thousands over the long term, so if you plan to be in your new home for a while and you have the cash up-front, it's certainly an option to consider. Points can be financed by adding them to the loan amount on a refinance and with some purchase transaction programs. Contact Audra to discuss your rate and point options, toll free at 877-848-9865, extension 389.
Unlike interest, points are paid up-front. If you're purchasing a home, you can deduct the points from your taxes in the year you buy the house. That means money in your pocket this year, rather than spread out over the next 5 to 30 years. If you're refinancing, the tax deduction from the points is spread over the term of the loan. *please consult with you tax professional for tax advice.

2) THIRD PARTY FEES:
Third party fees are fees that are collected and passed on to the person who actually performed the service.

A) Appraisal Fee - The appraiser does not create value, the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. Considerable research and collection of data must be completed prior to the appraiser arriving at a final opinion of value.

B) Credit Report Fee - Three major national credit bureaus (Equifax, TransUnion and Experian) supply lenders with the information on your credit behavior.

C) Settlement Agent/Title Company/Attorney Fees
Settlement agent fees vary greatly between each other as well as by city, county, and state. On a purchase transaction, we encourage you to consult with your local settlement companies to get the most accurate assessment of these closing costs. On a refinance transaction, we will provide you with these services. The fees paid to the Settlement Company often include the following Items:

• Title Search - The title search provides proof to the lender that the seller owns the property you wish to purchase in order to get a loan. The title search involves reviewing public records in local government offices, including recorders of deeds, county courts, tax assessors and surveyors. Records of deaths, divorces, court judgments, liens and contests over wills (all of which can affect ownership rights) must also be examined. The title search assures you and your lender that there are no claims against the property.
  
  
• Title insurance - Title insurance protects you and the lender in case of an unresolved claim affecting the marketable title to the property.
  
  
• Attorney/Settlement fee – Is the fee the company representing you charges you for closing your loan and reviewing all the paperwork with you at the closing. Document Preparation - This fee is charged to cover the cost for the preparation of all closing documentation required to perfect the lien to ensure the collateral for the loan Recording Fees - A third party fee collected by the lender at the loan closing used for recording the mortgage with the local authorities or recording office, thereby making it part of the public records.

3) PREPAID ITEMS
Borrowers are required to prepay the following and put taxes and insurance in escrow. These fees are industry standard practices.

• 2 months real estate tax escrow account
  When borrowers make their monthly mortgage payments, they usually also make a payment towards the anticipated annual amount needed to pay taxes and insurance premiums. These funds are placed in an escrow account until the lender pays the taxes and insurance as they become due. The lender is responsible for the timely disbursement of escrow funds to pay your tax and homeowners bills as they come due. The escrow accounts are a cushion kept by the lender to assure that if the cost of any escrowed item were to increase in the future, there would be sufficient funds to pay all bills as they come due.
  
  
• 2 months homeowners/hazard insurance escrow account
  Homeowner's and hazard insurance offer protection against physical damage to your new home by fire, wind, vandalism and other causes. Most states require that the annual premium on your homeowner's insurance be paid in advance and put into effect at closing. Prices for homeowner's insurance vary depending upon the value of the home, the location and the insurance agency.
  
  
• 1 year homeowners insurance (on a purchase transaction you need to show the lender that you paid for your insurance for 1 full year). The mortgage clause you need to provide to your homeowners insurance company is Northeast Mortgage Corporation, ATIMA, Its successors and/or assigns, 800 Main Street South, Southbury, CT 06488. They may fax the insurance information to Audra at 508-632-0713.
  
  
• Private Mortgage Insurance (PMI) escrow account depending on if you are over 80% loan to value and what type of program you choose, we will also escrow 2 months of PMI.
  
  
• Property tax installment payment - Property taxes for real estate must be paid quarterly, semi-annually, or annually to the local government. Property taxes are the most common expense prorated (shared or split) between the buyer and seller. Your closing agent will determine your portion of the taxes from the date of closing. This varies by state.
  
  
• City/County/State Tax - Some states have taxes related to the real estate transaction. These taxes range from a few dollars to 1 3/4 percent of the loan amount depending on the jurisdiction.
  
  
• Prepaid/Interim interest - this cost is based upon your closing date and covers loan interest from the day you close through the end of the month. Therefore, it can range from 0-30 days' interest, payable to the lender.