When it comes to mortgages, there are a variety of fees that you may be required to pay. These fees are charged by the lender for “originating” the loan or for granting you the loan. In addition, certain closing costs can sometimes be added to the buyer's loan amount, instead of paying it in cash at closing. The costs that can be included in your loan vary depending on the lender, but may include origination fees, valuation and inspection fees, title fees, and more.
Inspections are performed to check the condition of a property before the lender issues a loan. Just like an appraisal, lenders want to make sure that the property they're lending against is in good condition and isn't affected by factors such as termites or water damage. In addition, like appraisal fees, these costs can be paid separately or sometimes added to the buyer's loan balance. Government-backed mortgages have initial fees that are paid at closing if not included in the loan. When buying a home, you can compare prices and negotiate some of the charges to reduce closing costs.
In certain cases, sellers can also pay the cost of a home warranty (if offered) and the fees of any association to which their property belongs. These points can cover the opening fee of the loan (usually a fixed amount), as well as the application fee that some lenders charge. This document shows the new ownership of the property, and counties generally charge a nominal fee for filing the new deed. Mortgage closing costs are the fees you pay when you get a loan, either when buying a property or when you refinance. Appraisals must be performed by an objective third party and involve a single fee, so they are generally not negotiable.
Loan origination fees are a percentage of the value of the loan that borrowers pay to secure their loan. If you see a fee that seems excessive or out of place to you, such as an application fee or a mortgage rate setting fee, you should pressure your lender for more details. With real estate sales fees and taxes included, total real estate closing costs can approach 15% of the purchase price of a property. While these costs can be substantial, the seller pays several of these charges, such as the real estate commission, which can represent approximately 6% of the purchase price. Before you start buying a home, carefully consider your other expenses and your budget, and make sure that you can pay both the down payment and any closing fees or costs that may arise during the process.
These charges are paid to the company to determine if the property is in a flood zone and to alert the lender if the flood zone changes. For example, you may have to pay a title search fee to the title company for searching the property records to ensure that no one else can claim the property. When buying a home, the title must be transferred from the seller to the buyer, which can entail a variety of fees. With a little planning, you might even be able to get rid of some of these fees or find more cost-effective alternatives. It is important to understand all of these fees before signing any documents related to your mortgage. While this may result in some savings in initial costs, it will actually increase the total cost of your mortgage, since you'll pay interest on these expenses over the life of your loan.
Knowing what fees are included in your mortgage will help you make an informed decision when it comes time to sign on the dotted line.