October 25th, 2012
Whether you’re a first timer or a re-financer, you want to know where your money is going. When you’re signing all of the forms, a good loan officer recommends you read each page, but seeing all of those numbers can make your eyes cross. Thankfully, mortgage paperwork has gotten simpler over the years, and fees can be grouped into a few categories. Mortgage fees are also called settlement costs and vary quite a lot amongst lenders.
These are fees asked for by the lender.
Application Fee – The fee charged by your bank or lender to apply for a loan used to cover initial processing costs and a credit check. If they pull your credit report from all three bureaus, the fee will be higher.
Loan Origination Fee – This fee is designed to cover the costs of processing and evaluating a loan for you, such as legal costs, notary fees, and overhead. It’s sometimes called an underwriting, administration, or processing fee.
These are fees paid to third parties as part of the home purchase process.
Appraisal Fees – Lenders want to ensure to the best of their ability that the purchased property is worth at least as much as the loan amount. An appraisal fee pays for a determination of the value of the home and lot you want to purchase or refinance. Some lenders and brokers include the appraisal fee in the application fee. Make certain that you ask for a copy of the appraisal. If you are refinancing or have had a recent appraisal of the property, some lenders may waive the requirement for a new one.
Home Inspection Fee – Your lender may require you to get a home inspection to check for major structural or other damage, water quality, leaks, etc. The most common inspection is for termites. In rural areas, there may be a test of the septic system as well as a quality test on the water supply. Even if it’s not required, a home inspection is a good idea for your peace of mind. If nothing else, you’ll be able to plan when you will have to make investments into the property such as a new roof.
Property Survey Fee – Some lenders require a simple survey to confirm locations of boundaries and easements as well as the location of buildings and improvements. If there are questions as to the legality of these issues, such as a boundary line dispute with neighbors, the lender will require a complete, and more costly, survey.
Tomorrow, we’ll finish up with Mortgage Fees and Other Fees. Are there any fees that you’re curious about?