Home buying: Your loan estimate.
When you’ve finished your mortgage loan application, your loan officer will walk you through documents that show you the estimated costs associated with your loan scenarios.
Once you have given an address of the property you intend to purchase, the lender must provide you with a “Loan Estimate” within three business days of submitting your application. This document details your selected loan terms, and estimated fees and closing costs. It makes it easy to compare rates and closing costs across loan options, especially if you’re comparing different lenders.
Read the loan estimate carefully and review it with your First Tech Loan Officer to make sure that you have a clear understanding of what are you paying and why, as well as which numbers may be subject to change.
Keep in mind that the loan estimate is only an upfront estimate, and the final closing costs may differ. First Tech will communicate changes along the way.
This document outlines the basic terms of your mortgage: your loan amount, interest rate, and monthly payment of principal plus interest. If you have an adjustable rate loan, you’ll see details about when and how your rate will adjust in the future.
Estimated taxes, insurance, and assessments
Most lenders require that you pay in advance for some items like homeowner’s insuranceInsurance products and services offered through First Tech Insurance Services, a wholly owned subsidiary of First Tech Federal Credit Union, mortgage insurance, and property taxes.
The following is a breakdown of costs to be paid at closing:
These are fees charged by your lender upon funding of your loan. These may be in the form of fees or points (one point equals 1% of your mortgage amount).
Fees for services you cannot shop for
There are some services, such as credit reports and appraisals, that will be performed by professionals or entities selected by First Tech. You will be responsible for any fees associated with these services.
Fees for services you can shop for
There are some services where you can choose your own provider, including title insurance, property survey, or pest inspections. You’ll be responsible for any fees associated with these services.
Common fees and expenses:
This is the fee paid to assess the value of the home you want to buy. First Tech will not provide you with a mortgage loan amount greater than the property’s fair market value as determined by an appraiser.
Credit report fee
Your credit history and credit score, which are included in your credit report, are important factors in determining the interest rate you’ll be offered.
Title services fee and title insurance
This fee is paid to a title company to search county records to make sure that the title to the property you wish to buy is free and clear of any complications, like pending debts or liens.
Government recording charges
These charges register the property under your name and record the mortgage or deed of trust.
Insurance is required to protect you and your lender in the event of loss from hazards such as fire, etc. Work with an insurance agent to determine which coverage you will need. First Tech will work with you to pre-pay insurance through an escrow account.
Initial deposit for your escrow/impound account
This represents the money that you are required to pay in advance to establish your escrow/impound account. The escrow account is used to pay for homeowner’s insurance, property taxes, and mortgage insurance if applicable.
Loan disclosures are required by law and allow you the opportunity to ask questions so you understand the total costs you will pay for the mortgage loan.
They reflect the most signiﬁcant characteristics of your mortgage loan:
- The annual percentage rate (APR): This takes into account all applicable loan charges, including loan discounts, origination fees, prepaid interest, and other credit costs.
- The payment amount: This is the dollar amount of your principal and interest payments and their frequency.
- The total interest percentage: This is the total amount of interest that you’ll pay over the loan term as a percentage of your loan amount.