Fees, Fees, Everywhere! Four Home Loan Fees to Be on the Lookout For

SANTA CLARITA VALLEY REAL ESTATE | HOMES FOR SALE IN SANTA CLARITA CA | SANTA CLARITA FORECLOSURES | RENTALS IN SANTA CLARITA

The heat surrounding the unexpected increases in bank fees this week serves as a reminder for borrowers to read the fine print in their mortgage agreement.  Even though rates are at an all-time low, borrowers should not only want the best rate, but the best overall deal on their next home loan.

We’ve identified a few fees borrowers should watch out for when beginning the home loan process:

1. Processing fees
   Processing fees may be referred to as underwriting fees, processing charges, application fees or even rate-lock fees.  Application fees are fairly common, although lenders may tack  on additional fees and call them processing fees or underwriting fees.  On your Good Faith Estimate, be sure you walk through each fee with your loan officer so you know exactly what you’re being charged for.
2. Appraisal Fees
   Appraisers may collect fees uprfont, even if your loan falls through.  With new, longer appraisal forms, appraisers who are billed hourly could be charging more. In a recent survey of LendingTree network lenders, the number one biggest refinancing mistake that borrowers make is overvaluing their home on their refinance application.  Once the home is appraised at an amount far less than what was disclosed to the lender, the original offer may not hold true due to the change in the loan-to-value ratio. 
3. Private Mortgage Insurance
   If a borrower doesn’t have at least 20% equity in their home they wish to refinance, lenders may require borrowers to pay private mortgage insurance on top of their monthly mortgage payment as a way to protect themselves in the event of mortgage defaults
4. Mortgage guarantees   
   Fannie Mae and Freddie Mac charge lenders a fee in return for guaranteeing principal and interest on mortgage loans sold to or insured by these government agencies, and it’s common that lenders may pass on the fees to the borrowers.  To find out if your loan will include these charges, ask your lender if your loan will be sold to or insured by Freddie Mac or Fannie Mae

 How can you discover these fees?  The answer is in the Good Faith Estimate required by every lender.  Lenders may have different names for each fee, so it’s important that you fully understand what is included in each fee, watch for any redundancies and ask questions.  One lender may have a lower rate than the next, but higher fees may be revealed in the Good Faith Estimate.  It’s always a good idea to comparison shop home loans, where borrowers can compare offers apples-to-apples and to decide what the best overall deal is, rather than looking only at the lowest rate.

 

 

 

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