Closing Cost

[Cuong Thai]

Good morning Everyone,

 A few weeks ago, I posted a question about refinancing my property.  I was able to find a mortgage broker who has agreed on GFE to work with me on refinancing my property.  He quoted me 3.879% with about 300 dollars worth of closing cost for 30 years fixed (Before refinancing, the rate was 4.675 for 30 years fixed which I had for over a year).  In addition, I have to pay for the appraisal.

Yesterday, he gave me a call telling me that the loan has been approved and an investor has agreed to fund.  Then he asked me to give him my credit card so he can order the appraisal.  I agreed to give it to him.

I talked to one of my friend about this matter, and he advised me to ask the broker for the cost of doing the loan before actually ordering the appraisal.  He said that I need to make sure that the amount of closing cost that he quoted before closely matches with the one that he offered.

Is he right on this issue?  What do I need to do?

Since I am new to this whole thing and still learning new things everyday, I really appreciate your opinions.

Thanks for your help,

Cuong N. Thai

[Fred T.]

First off, since you did not mention, I am assuming this is a normal Residential Mortgage and NOT a Commercial Mortgage or Hard Money. If this IS NOT a Residential Mortgage, then disregard this post as some of the items mentioned below may not be applicable or required.

The Mortgage Broker is required to issue you a Good Faith Estimate (GFE) and Truth in Lending (TIL) form along with a slew of State and Federal Mandated Disclosures for you to review and sign off on prior to ordering an appraisal or opening up an Underwriting File (U/W). 

Your GFE will disclose ALL related fees and costs with regard to the Loan. This includes, Lender Fees, 3rd Party Fees (Appraisal, Survey, WDO Report, etc.), Broker Fees, YSP "Yield Spread Premium", Title Costs, Government (State/Local) Costs and so forth. This GFE must come within +/- 10% of the Final HUD-1 at the closing of your file. You will receive the HUD-1 roughly 3 days prior to closing the file for your final review.

He is also required, if you ask him, to provide you a copy of the Credit Report Scores being used to "shop" your loan out with.

Once he has your Credit File and all signed Disclosures, he can then "Shop" your loan and start securing "Conditional Loan Approvals" from Lenders. The CLAs will list what conditions need to be met by you and/or the property, what the terms are, what the program itself is, what the interest rates are, what the associated fees are on the Lender side and so forth.

The Broker then uses this CLA to "Update" your GFE & TIL as needed and provides you copies of the revised documents for your review and approval.

Only once the above process is completed, and you agree with everything thus far, is the Appraisal Ordered, Title Report Ordered and U/W File is opened with the Lender.

As far as Appraisal Fees, they are usually paid to the Appraiser themselves either in person or via an online payment method straight to the Appraiser...not the Mortgage Broker.

Good Luck!/