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The 5 Mortgage Fees You Need to Be Aware Of

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Have you ever gone shopping and when you go to checkout, the total ended up being WAY higher than you thought it would be? Well you'd be surprised at how often that happens in the world of mortgages.

We want to make sure no one says: "WHAT THE FEES?!" when they hit the closing table again. Take control of your mortgage.

We want to educate everyone on the potential fees you may be charged during the mortgage process, especially at the end with Closing Costs.


What are Closing Costs? Closing costs include all fees paid by borrowers or sellers during the closing of a mortgage loan. They usually include the following five types of fees:

 

  1. Appraisal fee

Lenders need an appraisal by a certified third-party appraiser to determine if the home you wish to buy is worth the amount you want to borrow. This one-time, upfront fee usually amounts to a few hundred dollars.

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  1. Loan-related fees

Assumption fee: If you take over the seller’s mortgage, you have to pay a fee based on the balance.

Attorney fees: Some states mandate an attorney’s presence at closings. The work on the closing documentation may be included in their fees.

Origination fee: Many lenders collect this up front to pay the appraiser, arrange your mortgage loan, etc. Others waive this unless you are a high-risk borrower.

Discount fees or points: An upfront fee paid to reduce your loan’s interest rate. The cost of one point equals one percent of the loan amount. This is worthwhile only if you plan to stay in the home for long.

Prepaid interest: Most lenders ask you to pay the interest you owe between the date of settlement and the first monthly payment due date.

Broker fee: Mortgage brokers usually charge a percentage of the loan amount as fees.

  

  1. Mortgage insurance fees

Buyers who pay less than 20 percent as down payment have to purchase private mortgage insurance (PMI). This protects lenders if borrowers default payment.

If your loan is insured by the Federal Housing Administration (FHA), you have to pay mortgage insurance premiums. If it is guaranteed by the Department of Veterans Affairs (DVA) or the U.S. Department of Agriculture (USDA), you have to pay guarantee fees.

 

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  1. Taxes, annual fees and insurance

You may have to pay two months’ worth of city and county property taxes and a tax for title transfer at closing.

Lenders require that you buy homeowner’s insurance to cover the house and its contents.

There might also be an annual fee to your condo or homeowners’ association.

What Makes Wyndham Different?

Unlike most mortgage lenders, we offer a fully digital, streamlined approach that saves you money. We don’t spend large amounts of money on big marketing campaigns, blockbuster endorsements, or stadiums that ultimately get passed onto the customer. 

Oh yeah, we use robots. Our advanced tech cuts out waste and extra costs in the process.

 

  1. Title fees

Title insurance protects lenders in case there’s an error in the title search and an ownership claim after the property is sold. Coverage lasts until the loan is paid off. Buyers also purchase title insurance to protect themselves from similar problems. Coverage lasts as long as you or your heirs own it.

A title search ensures that the seller actually owns the property and there are no outstanding claims or liens against it. The fees for this may be included in the title insurance cost.

Apart from this, you may need to pay recording fees to make your purchase official.

To read a more in-depth list of the fees you can and can't avoid, check out this link

 

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There are still plenty of other fees lenders may charge you. Certain fees can be avoided (like Credit Report, Flood Certification, Tax Service, Underwriting, etc.) depending on your loan, and if you work with a low-fee lender like Wyndham

 

Read up on the scariest word in mortgage: FEES, and know what fees to avoid at www.WhatTheFees.com

 

Want a low-fee, competitive home loan with no gimmicks or hidden fees that will save you thousands in closing costs? Get started below

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Tyler Voigt
By: Tyler Voigt

Resident Marketing Specialist and Millennial at Wyndham Capital.