GFE Definitions

Total Loan Amount – This is the total amount including any MIP on FHA loans, or any VA Funding Fee on VA loans, being financed in with the base loan amount.

Interest Rate – This is the actual interest rate of your loan expressed in decimals.  Decimal = 0.125 = 1/8, 0.25 = 1/4, 0.375 = 3/8, 0.50 = 1/2,  0.625 = 5/8, 0.75 = 3/4, 0.875 = 7/8.

Term – The term is the length of the mortgage in months 120 months = 10 years, 180 months = 15 years, 240 months = 20 years, 300 months = 25 years, 360 months = 30 years.

MIP / FF – MIP applies to FHA loans and is the amount of the upfront mortgage insurance premium (UFMIP) being financed in with the base loan amount.  FF applies to VA loans and is the amount of the VA Funding Fee being financed in the loan amount.

Loan Origination Fee – Expressed in point or a percentage of the loan amount, this fee is paid for originating the loan.

Loan Discount – Expressed in points of the loan amount, this fee may be paid to the investor.  Used to buy down a lower interest rate or as an adjustment for lower loan amounts.

Appraisal Fee – This fee is paid to a Residential Appraiser who determines the value of the property you are buying or refinancing.

Credit Report – This fee is paid to a credit agency for providing a credit report on the borrower.

Lender’s Inspection Fee – Usually this fee only applies to new construction (homes being built).  It may also be charged if the appraisal report requires repairs to an existing home.

Mortgage Broker Fee – This space is used for additional fees paid to the lender/broker for internal external work being performed on the loan.  Could be considered “junk fees”.

Tax Related Service Fee – This is an investor fee usually paid to a third party company that monitors the payment of the taxes on the property.

Processing Fee – Paid to a lender/broker for preparing the loan file for underwriting.

Underwriting Fee – This is an investor fee for underwriting (determining the approval) of the loan.

Wire Transfer – Charge for the investor for wiring funds.

Flood Certificate – A certificate from a third party company determining whether the property is in a flood zone or not.

Lender Escrow Waiver Fee – A fee charged by the investor when the borrower elects to pay their own taxes and insurance.

Closing or Escrow Fee – Paid to the Title Company for closing your loan.

Document Preparation Fee – Investor charge for their attorneys to review the closing papers.

Notary Fee – A fee to have a notary close the loan.

Attorney Fees – Paid to an independent attorney for reviewing the closing papers.

Title Insurance – Paid to the Title Company for your property title insurance.  On a purchase this fee is small for the mortgagee policy usually paid by the borrower.  The owners title policy is normally paid by the seller and is approximately 1% of the sales price.  These fees are set by the State Board of Insurance.

Other Title Company Fees – Such as Tax Certificates, Courier Fees, Tax Deletions and Endorsements and other misc. charges.  These fees are estimated and can vary from title company.  Charges for 2^nd lien document preparation and other fees associated with a 2^nd lien may be listed here, too.

Recording Fees – Charge by the county courthouse to record the Warranty Deed of Trust papers after you close the loan.

Pest Inspection – The estimated cost of having a pest (termite) inspection on the home.  This is required on all purchases.

Survey – The estimated cost of having the property surveyed by a licensed surveyor.  This fee will vary depending on the size and location of the property.

Interest – (called prepaid interest) Interest paid to the lender on the new home from the date of closing through the last day of the month the loan closes in.  This amount will vary depending on the actual closing date and how many days remain in the month.   The closer to the end of the month you close the lower the prepaid interest charge to you.

Mortgage Insurance Premium – FHA Loans Only.  The total amount of the Upfront Mortgage Insurance premium.  Usually financed in the new loan amount. 

Hazard Insurance Premium – Cost of a one year Hazard (Homeowner’s) Insurance Policy.  This is an estimated amount until the borrower gives Texas one a binder or policy from the Insurance Agent or their choice.

Tax and Assessments – Usually used on refinance loans for listing any delinquent or past due taxes that must be included in the payoff of the borrower’s current loan. 

VA Funding Fee – VA Loan Only.  The total amount of the VA Funding Fee.  Usually financed in the new loan amount.

Reserves – Used to determine the number of months required and the amount of reserves needed to establish an escrow account for the new loan.  These amounts will vary until you have tax certificates and your insurance documents to finalize the numbers.

Compensation to broker – Amount the lender/broker will receive in the amount of a % or flat fee.

Total Estimated Funds Needed to Close – This space summarizes the totals for sales price, loan amount, closing costs, prepaids/reserves, seller paid closing costs, credits tot he borrower for items paid in advance ( credit report, appraisal, etc.), escrow funds on deposit, etc..

Total Estimated Monthly Payment – This space summarizes your monthly payment including the P&I, other financing (2^nd Lien pymnt), insurance, taxes, mtg insurance, HOA fees & total monthly (PITI) payment.