Most people need mortgages to buy homes, but did you know that you can shop for a mortgage loan? Shopping for one helps you find the right one for your credit and financial situation. It also helps you find one with the lowest costs. Home loans have fees, but different lenders and loan programs charge different ones. Here is an explanation of some of the main fees you will pay when you get a home loan.
Loan Origination Fee
The costliest fee you will inherit when getting a mortgage loan is the loan origination fee. This fee is a standard fee that all lenders charge to cover the costs of the work they do. The fee covers the costs of all the paperwork they must complete when handling your loan request. It also covers the costs of their phone calls, research, and time. You will pay a loan origination fee to any lender you use, and this will likely be the most expensive expense associated with getting a home loan other than actually paying off the house.
Document Preparation or Application Fees
Many lenders also charge a fee for processing your application or preparing documents. Some lenders call this a document preparation fee, while others might call it an application fee. Some lenders charge both, as they are for different things.
Credit Check Fees
When you apply for a mortgage, you can expect the lender to check your credit. Lenders must take the time to do this and may pay a fee for it. Therefore, they charge a credit check fee to people applying for loans.
The home loan process also requires title work. The lender will make sure that the home's title transfers to your name at closing, and they must complete steps to make this happen. The steps required for the title work cost money, and lenders pass these expenses to their customers at closing.
You might also have to pay prepaid interest when getting a home loan. Prepaid interest covers the interest costs for your loan from the date of closing to the date your first payment is due.
These are some common costs you will pay when getting a mortgage, but you might also have other fees. Lenders provide statements that show all the costs you will have, and you can ask for this statement before using the lender for a home loan. If you have questions about home loans, you can learn more by contacting a lender.Share