One thing is to borrow the cash you currently lack to purchase the house of your dreams and another thing is the fees needed for closing the deal with the bank. Usually, the bank charges you up to 3 to 5 percent from the overall mortgage but there are other comissions and fees too. We will review some of these “extra costs” and explain their meaning in the present article:
Application fee: this fee is usually no more than $300, and includes all the costs associated with the initiation of the mortgage application process.
Underwriting fee: This fee is charged by the lender and covers the final analysis and the process of approval of the mortgage loan.
Appraisal fee: An independent appraiser hired by the lender will make an evaluation in order to asses whether the property is worth or not the amount you’ve offered for it. The fee will be nothing less than $200 and up to $500 depending on the lender and appraiser they hire.
Credit report fee: one cheaper fee that will cost you no more than $25, the credit report fee is suppose to determine whether you are an acceptable credit risk.
Interest: Most lenders require the buyer to pay the interest on their loan from the date of signing the papers to the first monthly payment due date.
Mortgage insurance application fee: If your downpayment is less than 20 percent of the property purchased, you are required to carry an PMI (Private Mortgage Insurance), that will protect the lender. This fee is variable.
Lender’s inspection fee: when the borrower constructs his own house or tries to buy one under construction, the lender will charge an inspection fee after assesing the risks and other factors.
Lender’s attorney fee: when the lender needs to involve an attorney in the transaction, the borrower will pay “lender’s attorney fee”, no more than $400.
Process fee: Closing and processing the mortgage will be charged too by the lender. The fee is called “process fee”.
Loan discount points: when lowering the interest rate, the lander will charge a one time only fee. More points paid up front? More lower the interest.
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