Every mortgage loan is a commercial transaction and as such, it has fees. When a lender surprises you with abnormally low fees, or directly writes off some of the main fees, it is generally loaded on to the interest rate. It is not normal to say that there are no fees and then charge them all on the rate and leave them as part of the APR. It is your duty to find out what fees are included in the APR and which ones are not.
The Main Concepts
There are loan fees that are generated by the preparation of the document and checking procedures. “Processing fees” are charged for the collecting of information and its preparation for the final transaction. Generally not more than $500. “Underwriting” fee: covers the cost of evaluating the whole package, including the appraisal and your credit report, so as to determine whether the borrower can be approved; usually it is under $800.
“Funding Fee”, up to $500, charged for verifying the information necessary to transfer the funds.
Minor Loan Fees
These comprise: “Document Preparation”, charged by the lender for the accurate preparation of a document that reflects all the conditions of the loan, up to $150. “Tax Service”, for the arrangement of the correct disbursement of taxes, is not more than $75. “Wire Transfer Fee”, charged for wiring funds to the proper account, normally do not exceed $70.
These are fees that are paid for the enclosing of the transaction within all applicable laws. Depending on whether it is refinance or purchase, it can fluctuate between $500 and $1,200. In cases in which the price of the property exceeds $500,000 the escrow fees can be double this amount or maybe even more.
These are fees that have a direct application to the title, meaning legitimacy of the ownership of the property. The “Title Insurance” protects the lender against any title dispute. It is meant to assure that the seller is the rightful owner until the moment of the transaction. It could be anywhere between $600 and $1200. Another title fee is the “endorsement fee” which is the process of establishing the ownership transfer to the new owner. There is an instance in between, by which the lender is authorized to repossess in the event of a foreclosure. This fee is around $250.
This is a fee paid to the person who appraises the property and establishes its value, generally not more than $350.
A Final Word
These fees may vary as we have stated in each case, but watch out for any excessively high amount charged. They are considered rightful, authorized fees. Anything outside these must certainly not have values in excess of $200. Some will be charged at the moment of closing and others will be added to the interest rate, conveniently prorated, to form the APR. This is what must be evaluated as a whole, when shopping for a loan.
Mary Wise, a professional consultant at Badcreditloanservices.com with twenty years in the financial field, prevents consumers from falling into the hands of fraudulent lenders. In her website you will find more useful tips and interesting financial articles on this and many other related topics.