Typical Mortgage Loan Fees

Loan Fees

Don't make the mistake of thinking all you have to bring to closing is your down payment. There are many fees that surface from the bog called house buying. It seems everyone wants a piece of the pie, and a titanic chunk out of your wallet. But in reality, it is all part of the process. You can hang around and have the real estate agent or mortgage lender explain them all to you, or you can be savvier, know what these fees entail and try to negotiate a reduction. The latter looks better, right? Well here are the key fees the regular home buyer will encounter at closing, or before.

Credit Report Fee.

This will most likely be one of the first on the list. Until the mortgage lender knows your history and past scores, they cannot qualify you for a home loan. It is a helpful idea to already have a present copy of your past from each of the credit bureaus, but the bank must obtain one on their own. Those are the rules.

Appraisal Fee.

An independent agent needs to appraise (i.E. Determine the price of) the house and property. That way, you can discriminate if the seller has inflated the price or not. It also gives you a good negotiating tool and helps your lender narrow in on what the taxes and insurance will be.
Application Fee. This is what you pay the mortgage lender for processing your loan. Often times, it is lumped collectively with the appraisal and credit report fees.

Attorney Fees.

This may be a fee you incur since you want to seek legal counsel. That is especially sensible if you are dealing with a seller who is not selling his home through a real estate agent. However, the bank, mortgage broker or real estate agent may also have an attorney that goes over the loan and paperwork. If they do, make sure they let you know that and hit upon out how much of the fees you are required to pay.

Lock-In Fee.

If the mortgage lender gives you a heads up that interest rates may be on the rise, you have the option to lock in your loan at the current rate. Most times that will cost you a bit, but nothing exaggerated. On the other hand, if you have done your homework and know the rates
Will stay the same over the next few months, don't be pressured into locking in.

Loan Origination Fees.

This is an amount it takes to get your qualification and application
Processes going. Often times, banks will remove this fee is they think it can be a deal breaker. It pays for their clerical staff to do the background work.

Filing fees.

The courthouse may charge for filing your claim to the house, the title search, the deed, wire-transfer fees, etc.

Pre-paid Interest.

You pay on the interest of the mortgage loan every month as part of your monthly payments. This is the prorated amount from the day of closing to the beginning of the next month. No wonder people want to close as late in the month as possible.

Points.

Each point is 1% of the home loan amount. Regularly the more points you pay, the lower your interest rates. Occasionally, the mortgage lender will discount the points. Even 1/4 of a point can be a savings. Most loans have 2-3 points. For a $250K house, that can be $7,500.
Occasionally the seller will agree to pay the points. Sometimes you can negotiate to have them included in the loan itself. Various mortgage lenders refer to the origination fees as "points". Don't get them bewildered.

Most of these fees will be due at the time of the closing. That is when the home loan kicks in. Your real estate agent will get their commission then as well. The title company will also have their hand out. Home insurance premiums may need to be prepaid. Largely experts settle that beyond your down payment, you should set aside about 6% of the price of the house for fees.
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