Closing costs charged by lenders can differ by huge sums and can often be puzzling to compare. At Universal Funding, we encourage you to compare our closing costs (in addition to our rates) and compare them to other lenders. Also, we offer loans with Reduced Closing Costs or No Closing Costs in exchange for a slightly higher interest rate. We genuinely believe that we can offer the very best rates offered anywhere and we invite you to find out for yourself.

The best strategy to keeping closing costs to a minimum is to categorize the closings costs into five distinct divisions:

• Points

• Appraisal / Credit Report / Application Fees

• Lenders Fees

• Title Fees

• Prepaid Items

Points

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Typically, you can secure lower interest rates by paying more points; however, getting the lowest interest rate does not necessarily translate into getting the best deal. Points are fees that must be included in the calculation of total closing costs. One point equals one percent of the loan amount and should be converted into an actual dollar amount for the purpose of comparisons. Points can manifest themselves in a number of different classifications including discount points, loan origination points, and mortgage broker points. However, there is no significant difference in the different classifications. In other words, from the borrower's perspective, points are points.

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Appraisal / Credit Report / Application Fees

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In general, this category of fees does not tend to vary much between lenders.

Residential appraisals are completed by independent (third party) appraisers, but are ordered by a mortgage company. The cost of appraisals varies somewhat depending on state and region but will typically cost between $350 - $450. However, Universal Funding has negotiated special reduced fees with several major appraisal companies covering most of the country and passes the savings on to our borrowers. Typically, payment for the appraisal is made directly by the borrower to the appraiser on the day of the property inspection.

Credit reports usually cost $50 - $80 depending on the bureau from which they are requested.

Application fees are often non-refundable and used by lenders to establish a financial commitment from the borrower. Universal Funding charges no application fees.

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Lenders Fees

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These are fees that are paid to the Mortgage Company or bank. Lender fees can manifest themselves in a number of different types including underwriting fees, processing fees, tax related service fees, flood zone certification fees, funding fees, courier fees, wire transfer fees, document preparation fees, etc. It is not uncommon for lenders to advertise low rates while charge very high lender fees. Evaluate this category very carefully because lender creates new "junk fees" every day. At Universal Funding, we have one simple lender fee (processing fee) of $850 with no hidden costs.

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Title and Settlement Fees

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These fees are paid to the Title Company (a third party) which does the title work on your home. Charges include title search and abstract fees, settlement fees, title insurance policy premiums, survey charges, etc. The total fees charged by title companies can vary greatly. Universal Funding has secured arrangements with several title companies in order to offer reduced fees. However, you should feel free to shop around.

Title Insurance: $2.50 per $1,000 of the loan amount
Settlement/Attorney Fee: $300 - $600
Title Search: $150 - $350
Title Abstract: $150 - $350
Courier/Federal Express: $81
Recording Fees: Varies

Suggestion: If you are refinancing, you can be entitled to reduced title fees by providing a copy of you're currently title insurance policy and also a copy of the survey (land plat) of your property.

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Prepaid Items

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Borrowers are required to prepay the following items and also to put tax and insurance into a new escrow account with the lender. It is important to note that prepaid closing costs are actually not "fees," per se, and are standard industry practices that do not vary greatly between lenders.

• 2 - 12 months of real estate taxes

• 2 - 12 months of homeowners insurance (refinance)

• 1 year homeowners insurance paid at closing (purchase only)

• Mortgage interest for the interim number of days between your settlement date and the first the proceeding month

Special Note: Borrowers who do not wish to escrow their taxes & insurance may do so by adding .25 the points or by adding .125% to their interest rate. 20% Down payment is also required (20% equity for refinances).

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Universal Funding, LLC is a licensed mortgage company in the states of Maryland and District of Columbia.
©2007 Universal Funding, LLC. All Rights Reserved.
5620 St. Barnabas Rd., Suite 290, Oxon Hill, MD 20745
Phone 301.505.2515 Fax 301.505.2518 Email info@universalfundingllc.net
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