Posts Tagged ‘Closing cost’
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The Annual Percentage Rate (APR) is one of the most misunderstood numbers there is on the mortgage documentation. Additionally it is the most easily abused and even though it is supposed to exist to protect shoppers can be so misconstrued as to actually harm the shopper. Be that as it may here are fees that must be included in the calculations for APR in the state of Georgia.
| APR FEES | |
| Processing Fee | Allowed |
| Underwriting Fee | Allowed |
| Origination Fee to Lender | Allowed |
| Discount Points to Lender | Allowed |
| Broker Fees for Services Rendered | Allowed |
| Commitment Fee | Allowed |
| Lock Fee | Allowed |
| Closing/Escrow Fee to | Allowed |
| Attorney’s Fee to | Allowed |
| Disbursement/Funding Fee | Allowed |
| Wire Transfer Fee | Allowed |
| Warehouse Fee | Allowed |
| Assignment Fee | Allowed |
| Amortization Schedule Fee | Allowed |
| Copy Fee | Allowed |
| Fax Fee | Allowed |
| Document Review Fee to Lender | Allowed |
| Courier or Express Mail Fee to | Allowed |
The APR is the total cost of the loan over the life of the loan averaged with the base interest rate. For example if you have an interest rate or 4.5% and closing costs of $5000 on a $100,000 loan the .5% APR qualified closing costs would result in an APR of 4.923% while $10,000 in APR qualified closing costs on the same loan would result in an APR of 5.333%
The way this can be abused or manipulated is by charging a higher base rate and shifting the rate commission to cover some of the closing costs. Not that this is necessarily a bad thing but it gives a hint as to how this figure can be manipulated.
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— Ken Cook NMLS ID 208452
In 2008 the Federal Housing Administration, in a move to try and get permission from congress to insure 100% home loans, were able to get most private third party down payment assistance programs eliminated from the process. Government and civic organizations are still able to operate but some of the largest DPA companies are out of the business of helping home owners with their required contribution to the loan process. 
Since that date the only way to get down payment assistance is from generally higher priced government assistance programs or from a gift from a family member or employer. According to the HUD Handbook, chapter 2-10(C):
“Gift Funds.An outright gift of the cash investment is acceptable if the donor is the borrower’s relative, the borrower’s employer or labor union, a charitable organization, a governmental agency or public entity that has a program to provide homeownership assistance to low- and moderate-income families or first-time homebuyers, or a close friend with a clearly defined and documented interest in the borrower.”
There is much more to it than simply having the funds available. Not only does the gift money have to exist. The paper trail, evidence of the donor’s ability to give and proof of the relationship also has to be verified. Read the rest of this entry »
— Ken Cook NMLS ID 208452