What is the real cost associated with getting a FHA home loan? This page explains what the FHA loan closing costs are and what each charge is for. This way, you will be able to walk into a deal knowing what is happening and what the loan is going to cost you.
Closing costs are the fees associated with obtaining the loan. Here is an explanation of the FHA mortgage costs:
- Loan Origination – The loan origination is a fee that is charged to create the loan. This ends up being one of the ways that the lender and the loan officer are compensated for the loan. I am flexible with my clients in this fee, but I like to charge it and then credit it back to the homeowner because it is a tax deductible charge. The fee varies but it is usually 1% of the loan amount.
- Underwriting Fee – This is the fee charged by the underwriters to review the file, make a credit decision, and then sell the loan to the investor that will service the loan.
- Processing Fee – The fee that is charge by the processor for compiling the file, doing a double-check of the file, and presenting the best case to the underwriter why the borrower is a good credit risk.
- Administrative Fee – There are a lot of companies out there that charge a lot of junk FHA loan closing costs. Their fees include things like stamps, and document preparation, and wiring fees etc. We charge one low administrative fee that bundles all of these little things together to make it easy to do business with us.
- Appraisal Fee – The fee charged to have an appraiser inspect the property and then provide a report about the value of the property. This fee is charged at the time of application because the appraiser must be paid whether the loan closes or not.
- Credit Report Fee – This is the charge associated with pulling a credit report on the borrower.
- Title Fees – The title fees are the charges that are issued by the title company that will be closing the transaction. Although we are not the ones charging these FHA loan closing costs, we must disclose what the fees are going to be. These fees would include the closing fee, owner’s title insurance, lender’s title insurance, and recording fees.
These are the fees that are associated with FHA loans and based on FHA requirements. Our prices are some of the lowest in the industry and I am proud that our loan fees are low. This ultimately means that we can pass on this savings to you and reduce your cost of buying a home.
Contact me for a no cost, no hassle consultation on how I can help you buy or refinance a home for a low cost. There are even ways for us to structure the deal where I pay all of your closing costs to provide you with a “no cost” loan.