HOW MUCH? - mortgage fee

Home mortgage fees and tips.


Whether buying a first home or refinancing an existing home loan, you have to be prepared to pay some fees that add to the price of the house. Some mortgage fees are standard and almost every bank will charge more or less the same.

Others can differ quite a lot among lenders, so it’s better to know what they are when shopping for a mortgage.

Mortgage application fee.

Most banks will charge a small fee for processing a mortgage application, checking your credit score and the initial evaluation of your credit worthiness.

Mortgage origination fee.

This fee covers the bank’s cost of preparing the mortgage loan.

Appraisal fees.

Each time the bank lends money for buying real estate it will require a fair assessment of the market value of the property called appraisal.

Title insurance and title search fees.

Before lending money for a property purchase, the lenders will want to examine the public records for the property. The title insurance covers potential discrepancies in the public record which would put the bank at a loss, if any, up to the policy maximum. Often it is cheaper to buy the policy from the insurance company that issued the last policy.

Fees paid to the lender.

These fees are usually high, and they cover the cost of attorneys, escrow companies and real estate brokers who provide services to the mortgage company.

Discount points.

The lender will profit not only from mortgage interest paid over the years. Most will also require you to pay points, which equal one percent of the mortgage amount.
The number of points depends on the mortgage type and the competition among lenders.

Mortgage prepayment fees.

The prepayment fee is a penalty that a bank imposes on you when you pay off the mortgage earlier. These fees are limited in a number of states, and are not allowed in some types of mortgages, including VA loans and FHA loans.

There are also lenders who charge a full month's interest if you pay off the mortgage. It’s best to be aware of mortgage prepayment fees (which can be negotiable in many cases), before committing to a home loan, as you are likely to refinance.

Mortgage Fees
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Other fees.

With some types of loans you will also have to pay the VA mortgage guarantee, FAH mortgage or private mortgage insurance, and other miscellaneous fees.

Mortgage fees to watch out for.

Some banks feed off consumers with less than perfect credit and offer mortgages on very bad terms. Exercise caution when a lender is doing any of the following:
1. Up front mortgage fees that are above the normal market fees.
2. A negative amortization where the monthly mortgage payment is less than the actual interest. This will, over time, increase the principal amount of the mortgage.
3. A mandatory arbitration fee in case there’s a problem between you and the lender
4. A balloon payment which requires you to pay a large amount at the end of the loan.

See also: home purchase mistakes, refinancing tips, equity loan, choosing home loans, home loan, home and taxes, new home loan

Related topics: FHA insured mortgage




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