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Mortgage Closing Costs Defined

closing costsMortgage closing costs are fees including loan origination fees, underwriting fees, loan processing fees, discount points, title charges and a host of others…some legitimate, others garbage. The closing costs you will be required to pay when refinancing your mortgage are any fees paid to the mortgage broker or any third party company like the title company or your appraiser.

There are other administrative fees that come out of your pocket at closing like any unpaid interest or escrows that are a part of the cash you need to close and are not actually a part of your actual closing costs.

Definition: Mortgage Closing costs are the fees you pay up front when taking out a mortgage loan.

You can pay your closing costs several different ways. Writing a check at the title company is the most common method when purchasing your home. You have the option of including these costs in your loan amount in many cases when refinancing your mortgage. The problem many homeowners are aware of but not sure what to do about is simply knowing which closing costs are necessary and which fees are destined for the mortgage broker’s pocket…

While closing costs are fairly straight forward and you cut the fat once you know what to look for, there is another “junk fee” that many homeowners overlook altogether. If you’re a regular reader of this blog you’ll know that I am referring to Yield Spread Premium.

Definition: Yield Spread Premium is a percentage of your loan created when the mortgage broker locks and closes at a rate higher than necessary for your loan.

Mortgage brokers mark up your mortgage rate because the lender pays them a bonus for overcharging you…of course this happens most frequently without your knowledge. The good news for you is that this unnecessary markup of your mortgage rate and the commission it creates known as Yield Spread Premium can be avoided, saving you as much as thousands of dollars each and every year that you keep your home loan. You can learn more about avoiding Yield Spread premium by registering for the free mortgage refinancing videos found on this website.

{ 1 comment… add one }
  • peter tsigakos March 3, 2012, 11:43 am

    Good afternoon. How can I get closings costs in nyc and the definitions? Thank you

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