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Home Loan Associated Costs

There are many different types and variations in home loans that may meet your needs if you are looking for a loan.  Whether purchasing a home, building a new home, remodeling your current home, or planning a mortgage refinance you should be able to find a good fit for you.   If you have bad credit, there are loans available you may qualify for.  The very best loans are available for people with outstanding credit.    

No matter what your needs can be, there is likely a loan to fit them.  Perhaps you have greatly improved your credit and are considering mortgage refinancing to pay off your current loan, or you may be looking for a second mortgage to complete a remodel on your existing home.  Regardless of the type of loan you decide to go with, you should plan for the costs associated with a home loan.   

Lender fees are one of the commonly assessed costs for a home loan.  Lender fees are charged to cover the lender’s expenses that are associated with the loan origination and processing.  Verifying credit reports, origination fees, and discount points can fall under this category of lender fees.  They usually run anywhere from zero to 2 percent of the total loan amount, depending on the type of loan and the lender.    

Another fee that is often charged when you apply for a home loan or mortgage refinance is the appraisal fee.   A certified appraiser must be paid to verify the current market value of the home before a lender will lend money on the home.  Usually, they will do a market comparison where they research to see what other homes in the area have recently sold for to determine what the home is worth.  They usually walk through the home to measure and verify the number of square feet and the actual condition of the home and types of finishes contained therein.  They look for issues that would affect the value.  Different lenders require different types of appraisals, so the cost will often vary from one lender to the next. 

Title companies are hired every time a loan is processed and they charge fees.  The title company needs to research the title and produce a title policy once they have determined that the title is clear.  They are the ones that are responsible for closing the loan and recording the legal documentation such as the Deed of Trust that is required.  The title company will ensure that there are no liens on the property.   

If you are selling a home, you will also likely be responsible for the real estate commissions to the realtor who marketed and sold your house as part of the closing costs.  The title company will process and pay the real estate agent at closing.  Sometimes these commissions are split between the buyer and the seller.  This fee is one of the largest fees associated with a home loan, but it is often negotiable.  Shopping around for a realtor who will work with you for a reduced commission can really help lower your closing costs.  By learning about all of the closing costs you won't be shocked when you close the loan and can check ahead of time to make sure you have the proper funds.