Closing Costs

Closing Information

Closing Cost Estimate Explanation

“Closing Costs” associated with a home loan can be rather confusing, and at first glance, may even appear excessive. This brief explanation may take some of the mystery out of these items.

First, integrated within the term “Closing Costs” are Closing Fees and Pre-paid Items.

Closing Fees are charges for services whether they are directly to or to an outside vendor for their services. In reality, the only fees which are truly direct to are the $200 underwriting and $200 processing fee. Almost all others go to outside sources for their services.

Prepaid Items are costs paid at closing for taxes, interest, and insurance. Costs in which you are paying for an item in advance or the anticipation of an item which may be routinely associated with the procurement of a home loan. i.e. “Hazard Insurance – 1st Year”. Generally, they are recurring costs that do not relate directly to the acquisition of the property itself.

Closing Cost Items

Title Insurance: A contract by which the insurer agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgagee or otherwise. An “owners” title insurance policy insures the purchaser/owner. A mortgagee title insurance policy insures the lender of the property. The Title Insurance charge reflected on your closing cost estimate refers to the mortgagee title insurance policy.

Processing Fee: The fee that charges you to facilitate all the mortgage paperwork associated with your home loan.
Attorney/Settlement Agent (aka, ‘Closing Fee’): Typically, a title insurance company or a law attorney facilitates the closing and settlement of your loan transaction. This charge pays them for the use of their facility and personnel. This is an estimate of what a title company typically charges for their required service.
Appraisal: An opinion or estimate of property (collateral) value. A fee appraiser or appraisal company will be hired to appraise the subject property to determine a “fair market value”. This is the fee they charge for this required service.
Survey: A formal certificate statement, signed, certified, and dated by a registered land surveyor, giving the pertinent facts about a property, such as known points, dimensions, the location and dimensions of any improvements, and any easements or encroachments affecting it.
Tax Service Fee: A service performed by a tax service company which identifies the actual amount of local property taxes, the municipality, tax sidwell number and property tax due dates.
Recording: Fees charged by a local government to record (to make a matter of public record) the documents of the real estate transaction.
Credit Report: A report prepared by an independent credit reporting agency which verifies certain information concerning an applicant’s credit standing. This report generally contains a rating (“Credit Score”) that establishes creditworthiness based upon present financial condition, creditor experience, and past credit history.
Flood Check Fee: A charge by a company that evaluates whether the property is subject to flooding when a river, stream or other body of water is at flood stage. Lenders are required by the federal government to determine whether a financed property is located in a federally identified flood zone. If the property is in an identified flood zone, the law requires the lender to require the borrower to procure and carry flood insurance that reimburses the policy holder for damage to property caused by flooding.
Courier/Express Mail-Closing/Recording Processing: The Attorney/Settlement Agent that closed the transaction will express mail settlement documents to pertinent parties of the transaction.
Other fees may appear on the Closing Cost Estimate, such a Termite Inspection, Final/Lender Inspection, Investor Delivery Fee, Construction Administration Fee, Recording Processing Fee, Email Package Fee and other fees for services that may deemed necessary for a particular transaction. If you have questions regarding any fee, please feel free to call us.

Pre-Paid Items

Hazard Insurance – 1st Year: Insurance coverage which provides compensation to the insured in case of property loss or damage. Generally, you must purchase or show evidence of a one-year homeowner hazard insurance policy prior to closing, along with a paid receipt. “CF Bancorp Mortgage, LLC. and/or its assigns as their interest may appear” must appear on the policy as the “Mortgagee Loss Payee” clause.

Establishment of a segregated trust account (Escrow Account) in which escrow funds are held to pay future property taxes due and insurance premiums.

Taxes: A specific dollar amount of property tax payments deposited into your escrow account. Each tax payment amount represents one-twelfth of the anticipated annual tax amount. There may be the establishment of an escrow for each due date of a particular property tax (e.g. Summer and Winter tax bills).

Insurance: A specific dollar amount of insurance payments deposited into your escrow account. Each insurance payment amount represents one-twelfth of the anticipated annual insurance premium. There may be the establishment of an escrow for each type of insurance associated with your loan (e.g. Hazard, Flood and PMI- Private Mortgage Insurance).

"Interest for xx days @” (Pre-paid Interest): Mortgage interest that is paid in advance. Your mortgage payment is typically due on the first day of a month. Your closing date, however, may not be on the first day of a month. Therefore, the lender will charge you pre-paid interest from the day of closing to the first day of the next month.

Points or Discount

A fee that permanently or temporarily buys down the interest rate from the prevailing interest rates for a particular loan program. Each ‘point’ equals one-percent of the loan amount. For example, suppose a interest rate is at 6.50% and the loan amount is $100,000. By paying one point, or $1,000, you could ‘buy’ the interest rate down to perhaps, say 6.25%.

One last item: Annual Pecentage Rate (APR): A term defined in section 106 of the Federal Truth-In-Lending Act which expresses on an annual basis the charges imposed on the borrower to obtain a loan. The law requires lenders to quote an APR which is a rate of interest that takes into consideration certain closing costs associated with obtaining your home loan. The APR is not your note interest rate.

We will provide you with a service level that will exceed your expectations and encourage you to refer our services to others who may be in need of home loan financing.

What Happens at the Closing?

Many people may attend the closing: you, your loan officer, the buyer and their real estate agent, and an escrow agent (closer) from the Title Company. In certain instances, the loan officer and yourself will have reviewed the closing figures prior to closing and at closing, the Title Company represents the bank. During the closing, which takes approximately an hour, you will review and sign all of the relevant closing papers. A cashiers or certified check for the down payment and closing costs are exchanged and keys are passed to the new owner.

What is a Title?

A title is the document that verifies your legal right to your new home. Closing (also called the settlement) usually takes place at a Title Company. Your loan officer or your real estate agent or sales representative will help coordinate a convenient date between the involved parties.

Items to Bring to the Closing:

____ Bring yourself; if married, both spouses are required to attend closing

____ Valid government issued photo ID (drivers license or passport)

____ Cashiers/Certified Check to cover the down payment and the closing costs (CF Bancorp will provide you with the proper amount). The Cashiers check should be made payable to yourself. At the end of your closing, when you are fully satisfied, you will sign off on the back of the check

____ You should bring a Homeowners Insurance Policy and Paid Receipt. Before going through with the closing, CF Bancorp will contact you to confirm that you have your homeowners insurance and your paid receipt for the first-year’s premium. It is important to bring a copy of your homeowners insurance policy and paid receipt to the title company, regardless of whether you have provided it to the bank, as the title company will often ask for it at the closing. CF Bancorp will not be able to process the closing documents without having the proper homeowners insurance and paid receipt. Please understand that this step is for your protection, as we do not want anyone to close without having proper insurance coverage.

____ If you are purchasing a home or refinancing, please have your Agent fax us a declarations page and paid receipt prior to closing/settlement.

____ Please have your insurance agent add the following clause to your policy:

What to Bring to the Closing

CF Bancorp
ISAOA, ATIMA This clause is needed for your mortgage.
PO BOX 46999
MT. CLEMENS, MI 48046

CF Bancorp
PO BOX 46999 This clause is needed on an equity line.
MT. CLEMENS, MI 48046
This additional clause is needed if you have
an equity line as a second to avoid PMI
(private mortgage insurance.)