Mortgage Help   Mortgage Rates Real Estate Credit Foreclosure Tax Mortgage Rates  Mortgage Basics Chapter 1: How much house can you afford? Homeownership Should You Buy or Rent Summary   Chapter 2: Adjustable-rate mortgages ARM and a fixed-rate mortgage Fixed-rate mortgages Understanding the key elements Which type of lender is right for you? Other types of mortgages Subprime Summary   Chapter 3: Your credit score Down Payment How lenders set rates Low down payments Mortgage insurance Your mortgage payment Mortgage Points Summary   Chapter 4: The good faith estimate Inspection and Insurance Necessary paperwork for a buyer Other lender paperwork Paperwork and fees Prequalification and preapproval Special circumstances Summary   Chapter 5: Ten questions to ask Turned down for a mortgage Underwriting What lenders ask Summary   Chapter 6:  Understanding the closing process Escrow Summary   Chapter 7: When your mortgage is sold Avoiding foreclosure Paying ahead Payment changes Refinancing Removing mortgage insurance Summary The good faith estimate The federal Real Estate Settlement Procedures Act requires the lender to provide you with a good faith estimate of the fees due at closing. This document should be provided to you within three days of your mortgage application. The closing fees, also called settlement costs, will cover almost every expense associated with your home loan and the real estate purchase. Closing costs can range anywhere between 3% and 5% of the home's purchase price, so you should compare the good faith estimates between lenders before committing to a mortgage. It is advised that borrowers should compare at least two or more lenders based on their mortgage costs. The fees you will find listed on your good faith estimate usually include: " Origination points " Discount points " Property appraisal " Credit report fee " Lender's inspection fee " Mortgage insurance application " Assumption " Mortgage broker fee " Tax related service fee " Application " Commitment " Rate lock " Processing " Underwriting " Wire Transfer " Settlement, closing or escrow fees " Abstract of title search " Title examination " Document preparation " Notary " Attorney fees " Title insurance " Recording " City or county tax stamps " Transfer tax " Survey costs " Pest inspection " Condominium association application " Prepaid interest, hazard insurance, property taxes, mortgage insurance and flood insurance The important thing to keep in mind that the good faith estimate is only an estimate of your closing costs. While the lender directly controls some of the fees, others are charged according to the amount of work required to, for example, prepare the title for transfer. While some expenses are variable, the taxes and government fees should be the same from lender to lender. The lender-controlled fees The lender will control a variety of the fees in your closing costs. Most are subject to negotiation. These include the origination, discount, credit reporting, assumption, mortgage broker, tax related service, application, commitment, rate lock, processing, underwriting and wire transfer fees. If you have questions about any vague or unusual fees, make sure you ask them. Some mortgage companies like to throw in what are called junk fees that are simply for the company's profit. You can eliminate or reduce these fees if you know what should and shouldn't be included in the costs. The third-party fees These are the fees for the services provided for the lender. The lender is supposed to pass these costs directly on to you without marking them up. They include the settlement, closing or service fee, appraisal, abstract or title search, title examination, document preparation, notary, attorney and title insurance. You usually aren't able to negotiate these fees, but if you see that one is much higher than the competition's fees, ask for an explanation. Fees that you control Some of the third-party fees are in your control, for example, the attorney's fees or settlement, closing or service fees. In some states, closing is performed by an attorney, and in other states, the closing is handled by a title office. You are able to shop around for a closing-service provider. You are also expected to purchase your own homeowners insurance. What is non-negotiable? Your local and state governments set the recording fees, tax stamps and transfer taxes. You can't change these fees. Ask lots of questions Lenders often have trouble estimating title insurance and government fees. You should scrutinize these items. If a lender gives you a smaller estimate for title insurance of non-negotiable fees, it could be inaccurate. National lenders have particular trouble estimating the cost of title insurance due to the varying customs regarding who pays what costs. In some areas, the seller usually pays the title insurance, while in other areas, the buyer pays the title insurance. You can always negotiate with your seller to split or pay a portion of the closing costs, points or fees. You don't have to follow the local customs. You can reduce the amount of prepaid interest due by closing on or near the last day of the month. This is due to all mortgage loan payments being due near the first of the month.