Conventional lenders are changing the way they do business and have employed 3 new closing fees.
1. Adverse Market Delivery Charge.
Its objective is to give lenders/investors incentive due to concern in the lending market. The cost per mortgage originated is .25% of the loan amount. On the plus side the borrower can either pay it at close or add it to the loan. On a $300,000 purchase and a 90% loan to value ratio loan, the cost would be $675.
2. Loan-Level Price Adjustments (LLAP).
The LLPA fee is designed to reduce the lender/investor risk levels. This is based on the borrower’s credit score, loan-to-value on the mortgage, multiple-unit properties, and any secondary payment of interest-only. The borrower will pay the adjusted fee based on the risk type and amount of risk to the lender/investor.
3. Higher Down Payments Apply in Declining Markets
If you buy a home in an “Declining Market”, an area where the economy has a negative economic growth factor, you will be required to make a extra 5% down payment at closing. This will be applied to loans with a loan-to-value ratio of greater than 80%.
One of the first things, besides finding the right Realtor©, is to find a lender who has the knowledge and experience to explain every aspect of the loans. That way there are no surprises at the closing table.
