Learn About the 3 most Common Fees You Can Expect During Your Mortgage Application
Has anybody ever told you about how easy and painless applying for a mortgage was? No? The reason is that it isn’t! In fact, the mortgage application can often be so daunting for many home buyers that they end up hiring a professional to take over the task.
And while this can be beneficial for these buyers, it just takes the right bit of knowledge to help make the process noticeably easier, such as what fees you can expect to encounter and budget for.
This article can help with three of the most common fees you can expect to encounter and, unfortunately, pay.
Before you have even had a chance to fire up your favorite property website and search for your dream home, you are hit with a fee! Known as an establishment fee, account creation fee, or simply a startup fee, this is a charge which is passed on to you from your broker or mortgage lender.
This fee covers all of the administrative costs associated with creating your account and assessing your application. For example, there are a number of security checks which need to be performed during the process which attracts a fee from their respective provider. These fees are, in turn, passed on to the applicant as an establishment fee.
Early Repayment Fees
Why is this one so close to the top? Because it’s the fee which has the most chance of catching you off-guard when it’s too late.
Imagine that, during your mortgage repayments, you receive a bonus from your work or another injection of funds. In an attempt to save money on interest, you put this amount directly against your mortgage.
However, did you know that there is a fee? And it could be a big one!
When a mortgage lender assesses an application, part of their decision is based on the amount of money they will make in interest. This isn’t an evil strategy, they are simply protecting their business and income.
However, when you make additional payments on your mortgage than their calculations are adjusted and they receive less money in interest. After all, if you aren’t paying, then they aren’t receiving! With this in mind, many mortgage lenders will charge an early repayment fee which is applicable each time you make a payment over and above your regular schedule.
Before you start to second-guess the mortgage process because of fees, this one is actually a fee which benefits both the lender and you as an applicant.
When you shop at the Groupon Coupons page for Life Extension then you know you are going to receive a high-quality item. However, a mortgage lender doesn’t have the same level of assurance. After all, they have never seen the property.
For this reason, lenders will charge for the services of a property inspector. This inspector will provide the lender (and potentially yourself) with a detailed report which outlines the condition of the property and, most importantly, its value. If the value isn’t at a level which will allow the lender to recover funds should you cease making your repayments, then the mortgage isn’t likely to be approved.
This also benefits buyers, as they will also want to have a comprehensive understanding of just how much their property is worth.
While there are many more fees which you can expect, these are the most common you can expect and are fees which you should plan for. Of course, in addition to reading this article, be sure to ask your lender or broker about any and all fees which will be applicable throughout the mortgage application process, and when payment will be required.