The cost of getting a mortgage is much more than just the interest you will pay on the borrowed amount. When you sit down at the closing, you may be surprised with unexpected fees. While many homebuyers simply pay these fees without question, you can avoid many of them when you begin your home search by shopping the various mortgage companies. Fees vary considerably by mortgage lender. Knowing the fees and how much you should be charged will help you determine which mortgage lender is giving you the best overall deal and help you avoid being gouged at closing.
If you are planning on buying a home or refinancing your home, your lender is going to want to get an appraisal on the property before loaning you the money to purchase it. This is an essential fee in most cases, but knowing the actual cost of the appraisal is also important so you are not overpaying. Most appraisals cost between $225 and $750 depending on the actual value of the property. But some lenders will charge a mark-up or an additional fee for the appraisal, even though they are not supposed to charge more for third-party services than what the actual service costs. To avoid this, find out how much an appraisal for the property would cost and then look for the mortgage lender that charges close to that price.
Credit Report Costs
Getting a credit report is another essential fee when you choose to purchase a home. The lender will want to examine your credit score and credit history before deciding whether to work with you. A lender should not charge you more than about $25 for pulling your credit report. If your lender insists on charging more, find out why. Many mortgage lenders do not charge this fee at all because it is such a nominal amount.
Postage, Wire-Transfer and Courier Fees
Postage, wire-transfer, and courier fees have come down significantly over the last ten years as the world has gone electronic. Email has become a preferred way of sharing drafts and contracts. According to industry surveys, these three fees combined should not cost more than $75. If the lender you plan on working with wants to charge much more than that, it may be a good sign that you are getting gouged.
Most reputable mortgage lenders will give you a checklist of fees that you can expect to pay at closing when you first start working with them. This gives you the opportunity to shop around. But if there is one mortgage lender that you really want to work with, you may be able to negotiate some of the fees, especially if you have written proof from other lenders on their pricing. Doing your homework on mortgage lenders can save you hundreds or even thousands of dollars.