State of Minnesota
More about
Attorney General
Lori Swanson


Minnesota Attorney General's Office

1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101

(651) 296-3353
(800) 657-3787

M - F 8 am - 5 pm

TTY:(651) 297-7206
TTY:(800) 366-4812

Housing

Home Buyer's Handbook

APPENDIX D: Sample Buyer's Contingency

APPENDIX E: Explanation of Closing Costs

Application Fee
($150 to $400)

There may be a separate "application fee." This is broker-driven fee. Some lenders won't refund this fee if your application is turned down. Before filing an application, ask the lender under what circumstances, and to what extent, this fee is refundable. Get the lender's answer in writing. This fee should always be negotiable.

Underwriting Fee
($300 - $450 for "A" Paper also known as Prime $500+ for "B" Paper also known as Subprime)

Most lenders charge you to process your application. This is often known as an "underwriting fee."

Processing/Commitment/ Administration Fee
(Combined total should be no more than .5 percent of the loan value)

These are actually three different fees that may be grouped together or listed separately, however, the combined total of these three fees should not exceed .5 percent of the loan value. These are negotiable broker- and lender- driven fees.

Origination Fee
(1 percent of the loan value)

Origination fee is the term lenders use for the fee they charge you for extending a loan, above and beyond the interest they charge. Be sure to consider the origination fee along with points and all other fees in deciding which lender offers the best deal. Some lenders may charge more if they consider you a credit risk. This fee is negotiable.

Points or Discount Points
(Equal to 1 percent of the loan value)

Points may or may not be added, depending on the loan interest rate you apply for. If you are willing to pay more points (also called “up-front interest”), you should be able to get a lower interest rate on your loan. Paying points can be a good investment if you plan to live in your home for a fairly long time — about 10 years if you have a 30-year mortgage, or seven if you have a 15- year mortgage. Points are tax deductible in the first year of most loans.

Attorney's Fees
(Hourly rates vary; for example, they may range from $75 to $500)

In unusual cases, you may be required to pay for the services of the lender's attorney in connection with the closing. This would not cover your attorney's fees.

Appraisal Fee
($300 to $350, $500,000+ value $400-$500)

This is a fee for the appraisal of your property's value. An appraisal is required for most loans.

Plat Drawing/Survey
($60 plat drawing; $300 to $700 survey)

The lender or the title insurance company may require a plat drawing showing the location of the home and the lot line, as well as any easements and rights of way. But plat drawings often are inaccurate depictions that won't show you the exact property you own. For a precise drawing of your property lines, have the land surveyed. The survey will keep you from accidentally putting up a fence on your neighbor's property, chopping down a tree that doesn't belong to you or other actions that can result in lawsuits between neighbors.

Mortgage Insurance, Private Mortgage Insurance (PMI)
(Average of .5 percent)

This is the insurance required on some conventional loans. Typically, the larger the down payment, the lower the PMI costs.

Mortgage Insurance Premium (MIP)
(Up Front Mortgage Insurance Premium ("UFMIP") of 1 percent of the loan, plus an annual premium based on the loan term and loan-to-value ("LTV") at origination for a certain number of years)

This is also called FHA Mortgage Insurance because it is the insurance required for an FHA loan. For additional information on MIPs– including how the monthly premium is calculated– go to the HUD website at: www.hud.gov. You never need both private mortgage insurance and FHA mortgage insurance.

Mortgage Registration Tax
($2.30 per $1,000 of your mortgage, $2.40 per $1,000 in Hennepin and Ramsey Counties)

This is a tax from your state, county and city that all Minnesota mortgage borrowers must pay.

Settlement or Closing Fee
($225 to $300)

This fee is paid to the "settlement agent," "closing agent" or "closer" for conducting the closing.

Credit Report

The lender will order credit reports on you (and your spouse or other co-signer) to evaluate your credit history. Most lenders are rolling this fee into their administration fee.

Recording Fees
($92 per mortgage)

These fees are passed on to the county by the lender or closing company to record the documents. But sometimes closers tack on their own charge for having the documents filed. Your county recorder can verify the actual cost of the county's recording fees. Any fee charged to you beyond the amount quoted by the county recorder should be negotiable.

Tax Service Fees
(Average $75)

Some lenders charge to verify that you pay your taxes with the county. The county does not charge for the service, so consider this fee negotiable.

APPENDIX F: Good Faith Estimate

APPENDIX G: HUD-1 Settlement Statement

Next Page: Glossary of Terms