Community Lending Group

Fees fall into two categories: those related to your loan (closing costs) and those related to your property (prepaid items). Combined, these are known as settlement charges. Closing costs: These are expenses tied to your loan, such as origination charges, processing fees, underwriting fees, and any costs for reducing your interest rate. Prepaid items: To better understand prepaid items, consider what fees you would pay if purchasing the home with cash. Examples include property taxes, home inspections, and homeowners insurance premiums. This category also includes the title insurance policy premium. Daily interest charges accruing before your first payment are also classified as prepaid items. Although these charges relate to the loan rather than the purchase itself, they are categorized as prepaid items because they are tied to the timing of your loan closing rather than the loan's terms. You have flexibility in how you structure your fees. Generally, lower upfront fees will result in a higher interest rate. Your loan officer can provide a detailed fee breakdown. As a rough guideline, estimate $3,000 plus 1% of your loan amount.