Finding a home is only the first step in the home buying process. One of the most important and crucial steps is finding a mortgage that will pay for your home. The decisions you make on your mortgage will have financial consequences for years to come. A 30 year mortgage at two, three or even four quarters less can save a home owner tens of thousands.
When applying for a mortgage loan, lenders will include a wide list of fees in their estimates. This can be confusing for most home buyers. When we sit down with the buyers and begin discussing terminology, it gets in even more complex. New home buyers can research how to save on their monthly mortgage. Understanding the fees will only make negotiation easier and less time consuming. Every lender has their own list of fees, but here is a list of the typical ones.
- Inspection fee: This fee covers the cost for examinations by the lender or an outside inspector hired by the lender.
- Tip: Ask if the seller has already done this.
- Underwriting fee: This fee charge is for reviewing your loan application to make sure you qualify. For example…reviewing title, insurance, and appraisal documents to settle loan.
- Tip: Make sure you are NOT paying for this fee twice when working with a broker
- Flood certification fee: This fee covers the lender ensuring that your new home is not in a flood zone by verifying with tax records. The borrower is usually required to buy additional flood insurance in flood zone areas.
- Tax service fee: This fee is supposed to cover the cost of paying property taxes on your behalf. It is sent to both the lender and home owner.
- Appraisal fee: This is the fee charged for someone (usually an underwriter) to do an appraisal of the value of your home. This ensures the lender that your home will hold its value in case the buyer defaults on their loan. Typical cost could run up to $400.
- Origination fee: A fee the lender charges the borrower for creating the mortgage loan.
- Processing fee: A fee for all the tasks involved in creating your loan such as ordering the title and homeowners-insurance.
- Courier fees: This fee covers sending papers between the lender and settlement agent. This is either by courier or overnight delivery service. This can range up to $50, but should be negotiated.
If you need any help further understanding these fees, please contact our office today.