Defining Fees Sometimes Associated With Home Loans

The following fees associated with home loans are not charged by all lenders. Some descriptions may overlap since fee definitions often vary among institutions.

Loan application fees are considered “good faith deposits” by lenders who are wary of incurring loan start-up costs from borrowers who may be window shopping. The fee is refunded upon rejection of a loan, or credited to origination costs upon acceptance. $350 to $500.

Loan origination fees are charged by lenders to evaluate and prepare mortgage loans. About $200 plus 1.5% of the loan amount.

Loan preparation fees (sometimes termed documentation or processing fees) are charged for drafting and photo-copying loan documents as well as the overhead cost of software, computers and staff time. $50 to $250.

Points are imposed by lenders to increase their yields beyond the stated mortgage interest rates. One point equals 1% of the loan amount. Number of points charged by lenders vary widely, and are influenced by prevailing secondary market conditions and a lender’s relationship to that market.

Appraisal fee. Lenders require an estimate of your home’s market value before a loan can be issued. The fee may be waived if a lender has an in-house appraiser. Actual work involves inspecting and photographing the property, drawing up an appraisal report and preparing examples of comparable sales in the area. Cost depends upon home size and region. The average fee is $500.

Photo inspection fees may be assessed separately from appraisal fees, especially if levied by a contracted appraiser. The fee is for either photographing the property or reviewing a photograph of the property. $25 to $100.

Survey costs are levied by surveying firms, ensuring that a lot has not been encroached upon by other structures since the date of the last survey. The fee is usually required only for lots with meandering or obscure property lines. $125 to $300.

Underwriting fees are charged by lenders to make final decisions on loans. The process involves reviewing loan documents and credit and appraisal reports, as well as a final committee meeting. About $250.

Warehousing fees have several definitions. Many lenders charge for warehousing to cover their cost of maintaining loans while the loans are held for eventual sale in the secondary market. Some lenders simply define the charge as the cost incurred for keeping loan documents on file. Warehousing fees are typically charged by mortgage brokers--heavy users of the secondary market. $75 to $100.

In-house processing fees, typically charged by lenders when refinancing loans, pay the overhead costs of operating loan files. Such work is normally handled by title and escrow companies, which are not involved during refinancing. $100 to $400.

Assumption fees, charged by lenders, are levied when borrowers assume an existing mortgage. The charge covers much the same work done for origination services (see origination fee). $200 plus 1% of the loan amount is often charged.

Homeowner association documentation, required by lenders, provides proof that a condominium is covered under an association. $50 to $250.

Demand and reconveyance fees are levied by lenders or title companies to search records and pay off any existing liens or trust deeds. $90 to $125.

Personal credit report, a credit check of loan applicants, is required by lenders. Cost is usually what credit reporting agencies charge banks for the report. About $5.

Credit evaluation fee, charged by lenders, covers the cost of reviewing the credit report. About $40, although some lenders charge up to $150.

Tax service contract fee, charged by lenders, covers the cost of hiring firms that notify lenders if a borrower’s property taxes become delinquent. $55 to $85.

Amortization schedule fee, charged by lenders, covers the cost of supplying a printout showing how a loan’s payments, broken down into principal and interest, amortize over the life of the loan. About $10. If an outside contractor is used to prepare the schedule, cost may rise to $50 or more.

Escrow fees cover work involved during the entire escrow transaction. A base amount of from $150 to $300 is charged, plus $1.50 per each $1,000 of the loan amount.

Courier fees are charged by escrow companies to deliver documents by messenger to lenders. $25 to $50.

Wire transfer fees, charged by escrow companies, cover the cost of wiring money to the title insurance company. $25 to $85.

Notarizing fees, charged by escrow companies to notarize documents, typically run $5 a page and total about $25.

Drawing grant deed fee, charged by title company or escrow agent, is levied for preparing documents that transfer title. $25 to $100.

Recording grant deed fee, charged by escrow companies, covers the county recorder’s charge of recording documents that transfer the deed from the seller to the buyer. $5 to $10.

Recording trust deed fee covers the cost charged by the county recorder to place the deed on public record. About $35.

Loan tie-in fee, charged by the title company and assessed by the escrow company, is levied for helping borrowers review and sign loan documents. $75 to $200.

A fee to open an interest-bearing savings account for escrow funds, charged by escrow companies, costs about $25.

American Land Title Assn. policy of title insurance, purchased by the borrower for the lender, insures the lender in event of outstanding liens or title disputes. Cost varies, depending on the loan amount. For a $100,000 loan, about $595.

Title insurance guards lenders against errors made by title searchers. Cost depends on the loan amount. For a $80,000 loan, about $550.

Sub-escrow fees are charged by title companies to handle any loan payoffs. $55 to $100.

City taxes are split between the seller and the buyer. Currently, the city of Los Angeles charges $4.50 per $1,000 of the loan amount--compared to much lower taxes of $2.20 charged by Redondo Beach and Torrance.