When a lender is preparing a good faith estimate, the financial institution will create a list of additional costs, and each fee is associated with a level of tolerance. The costs can be related to numerous services, such as appraising the property, initiating a wire transfer, homeowner’s insurance, analyzing the borrower’s credit report, underwriting the loan and title insurance. Here, Acuity provides the first of four parts to clearly define Tolerance Cures and the Good Faith Estimate.
The level of tolerance determines whether or not a cost can be increased when the borrower completes the closing statement. The tolerance may be zero percent or 10 percent. The fee can also have no tolerance, and the costs in this category may increase by any percentage.
Several analyses have shown that closing costs typically account for two percent to four percent of the total price of the loan. According to one study, buyers who completed free consultations with at least three lenders were able to lower their closing costs by 10 percent.
Origination is the process of applying for a loan, and buyers will have to provide credit reports, information about their yearly incomes and a list of monthly expenses. When a lender originates the loan, the costs of the process have a tolerance of zero percent. Conversely, a borrower may choose a third-party originator, and if this company charges additional fees, the costs could be augmented by any percentage.
In today’s market, you need an agile title and closing partner that has its feet on the ground. Contact Acuity National Real Estate Solutions, a Freibert & Mattingly Title Group LLC company, today at 502.238.7500. To learn more about Acuity’s services, visit www.ftgclosings.com.