Defining the terms: a guide to common lending lingo

January 19, 1992|By Art Wong | Art Wong,Knight-Ridder News Service

What are "garbage fees?" "Document fees?"

As if the grab bag of mortgage loans isn't confusing enough, the escrow world has its own jargon. Here is a glossary of common lending and escrow terms.

* Appraisal: An estimate of property value used by lenders to decide how much they will lend. A borrower pays about $250 for an appraisal.

* Delivery fee: Charge for sending documents by messenger or express mail, typically $10 to $50.

* Document fee: The cost of preparing a deed, deed of trust or other documents, typically $10 to $50.

* Escrow: This is a final step in the sale of a home or refinancing. An escrow agent acts as a neutral third party to see that certain conditions are met before payment is exchanged for a deed. The conditions include getting a loan, appraisal, title search, insurance, termite report and the preparation of various documents.

* Garbage fees: The fees assessed in the escrow and loan process.

* Loan origination fee: Lender's charge for making a loan -- typically 1 percent to 2 percent of the loan amount.

* Loan tie-in fee: Charge for getting documents signed, typically $50 to $200.

* Primary mortgage insurance: Insurance that protects a lender against loss on a defaulted mortgage loan.

* Lock-in period: A period after a loan application is submitted, often 30 or 45 days, during which the lender won't change his quoted interest rate.

* Points: Fee charged by a lender. One point is equal to 1 percentage point.

* Refinance: Getting a new loan to pay off an existing loan. Generally this is done when the new loan is at a lower interest rate than the existing loan's interest rate.

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