In the first part of this series we discussed each individual mortgage costs. Here we look at how mortgage fees are charged in a little more detail, including examples explaining how these benefits in practice.
To recap the first part, some of the most common mortgage costs:. Application fees, credit report fees, loan origination fees, discount points, appraisal fees, title insurance, and other
is very important to keep an eye on what you're charging in terms of your mortgage costs, which can often reach 3% of loan amount ($ 6,000 to $ 200,000 home!). One of the reasons it is so easy to overlook the cost of mortgages is that they are often added to your final loan amount. When you finance a $ 200,000 loan, you May actually be funding the loan plus costs for a total of $ 206,000.
to protect consumers from fraudulent lenders, there are no federal requirements that will ensure you know exactly what you are charged for when you take out the loan. Before you ever sign a formal loan document, you will be presented with a GFE (good faith estimate), which shows you what your closing costs will be. Bring this assessment with you to the loan closing to ensure that actual costs are identical to what the assessment shows.
Let's see how it works in practice. Ben Borrower loan at $ 200,000 house. He goes on Larry lender and apply for a mortgage. To apply, Ben is required to pay $ 250 in advance to cover both the application fee and credit report fee. Ben gets approved and immediately receives a good faith estimate. This estimate shows that the estimates will cost $ 500 and his credit will be $ 500 issuance fee, plus 1 point discount. There will also be a $ 250 fee for title insurance. When everything is going through the loan closes, Ben and Larry meet in order to complete his loan. Instead of funding $ 200,000, including fees, Ben is the loan amount is now $ 203,250.
example above is, of course, entirely fictional and should check with your lender for a full disclosure of their fees.
of obtaining a mortgage often can cost you 3% of your loan amount, it is important to keep a close watch on what you pay for. Look for the cost categories listed above, read in relation to the good faith estimate and carefully hold the lender to the exact terms and conditions that were promised.