This video explains the Loan Costs section of the mortgage Loan Estimate form. Key terms for which figures are provided include:
- Closing Costs: the set of fees involved in transferring title of the property to the buyer.
- Origination Charges: fees the lender collects for the mortgage process. These may include fees for handling the application itself, as well as “Origination Fees” — paid by the lender to a party that originates your loan, such as a mortgage broker.
- Points: essentially, a form of prepaid interest. Points are paid at time of the loan to lower the interest rate of the loan. Points may be tax deductible.
- Underwriting: fees charged by the lender to evaluate loan risks, based on the transaction and the borrower’s financial attributes.
The Loan Costs section is usually found on Page 2 of the Loan Estimate.