Closing Costs

Q: What are Closing Costs?
Closing costs are one-time fees required to close a mortgage loan. Examples include underwriting, escrow, and title insurance fees.
back to top

Q: What fees are commonly included in closing costs?
Credit Report Fee - Charged by credit reporting companies to prepare your credit report, but at Salmon Bay, we pay this for you.
Underwriter Fee - Charged by the lender for facilitating the loan approval process.
Tax Service, Flood Certification,   Wire Fees - Set fees charged by the lender for required third-party services.
Appraisal Fee - Collected by SBCL and paid to a third-party appraisal company.
Processing Fee - A flat fee paid to SBCL for processing the loan transaction.
Title - Paid to the title company for ensuring transfer of title.
Escrow - Paid to the escrow company for managing document signing and transfer of funds required to close the transaction.
Recording - Paid to the county for recording the transfer of title.

The mortgage origination fee may be a closing cost depending on your rate. There are also other fees associated with the home buying process not related to the mortgage loan. Please consult with your Realtor.
back to top

Q: What is the difference between true closing costs and prepaid closing costs?
All of the fees described above are true closing costs, or one-time transaction fees. Prepaid closing costs include prepaid interest, hazard insurance (homeowner’s insurance), hazard insurance impounds, and property tax impounds. Prepaid closing costs are often referred to as recurring closing costs or impounds. The terms are used interchangeably.
back to top

Q: What are points and origination fees?
An origination fee is the same thing as a mortgage broker fee. This fee compensates your loan officer for facilitating the loan. A point refers to a percentage of the total loan amount; one point is 1% of the loan amount. So a one point origination fee on a $200,000 loan is $2,000.
back to top

Q: Do you offer a “no-points” loan?
We do, if a no-points loan is the best option for you. We can compare options based on your short- and long-term goals.
back to top

Q: Am I better off paying a lower origination fee or securing a lower interest rate?
There is no one right answer. Your loan officer can help you weigh the pros and cons of each strategy to determine the best approach based on personal factors such as how long you plan to stay in the home and how much you have in savings.
back to top

Q: What are discount points?
Discount points refer to a fee the borrower pays the lender to secure a lower interest rate.
back to top

Q: Can I save on fees by shopping around?
Lender and brokerage fees may vary slightly. The golden rule with closing costs is the higher the rate, the lower your closing costs; the lower the rate, the higher your closing costs. On a purchase, escrow, title, and recording fees are set by the companies that charge them. When choosing a mortgage broker, confidence and clear communication in the relationship is what matters the most.
back to top

Q: Can I roll my closing costs into the loan amount?
On refinance loans, closing costs are typically added to the loan amount so you have no out-of-pocket fees. You can also choose to pay them out-of-pocket to keep your loan amount down. On purchases, borrowers typically pay the closing costs along with their down payment. A common alternative is for the buyer/borrower to negotiate to have the seller pay a portion of the closing costs.
back to top

Q: Why should I use a mortgage broker vs. going directly to the bank?
A mortgage consultant at a bank can only offer you the loan programs of that particular bank. The rates are often not as low as you will find with a mortgage broker, who is able to shop around to find the best loan program for the borrower’s needs. Working with a bank can be compared to shopping retail, while working with a mortgage broker can be compared to shopping wholesale.
back to top

Rates

Q: What is your rate on a 30-year fixed mortgage?
This is our most frequently asked question and the answer is always the same: It depends who is asking and when. Mortgage interest rates change daily and can vary significantly depending on the term, type of loan, and the financial situation of the borrower.
back to top

Q: What personal factors determine the rate for which I qualify?
Here are the top five financial factors that apply to most borrowers:

1. Credit score
2. The number of discount and origination points you pay
3. For purchases, the size of your down payment. For refinancing, the loan-to-value ratio.
4. Whether the home is your primary residence or a vacation or investment property
5. For refinancing, the rate is generally higher if you are taking cash out or rolling in a second mortgage.

back to top

More questions about closing costs? Call us at 206.789.8629. We’ve never been stumped.