Before entering into any type of mortgage agreement, it is important to understand the different types of fees that may be involves. Due to the amount of money being borrowed from a lender, there are many different types of fees that may crop up. Therefore, it is very important for people to understand what the possibilities are beforehand. This then allows them to plan budgets and also gives them a better understanding on the mortgage process and what to expect.
Broker Fees
A brokers fee is what your mortgage broker/advisor will charge for their services and finding you a lender who will provide the mortgage loan. This charge could be based upon the amount of time that the mortgage broker has spent on this process or it could be a set percentage of the amount being borrowed.
Transaction and Settlement Fees
These types of fees may include those related to:
Abstract of Title
Credit reports
Deed Preparation
Recording and Admin
Settlement Documents
Solicitors
Surveys
The Application
Title Examination
Title Insurance
During the application process, the borrower will receive an estimate of the total, expected closing costs.
Loan Origination / Underwriting Fees
These are fees that are charged by the mortgage lender for processing the actual loan. They are often displayed and expressed as a percentage of the overall loan amount that is being borrowed.
All mortgage lenders or brokers will be able to give you an estimate of their fees. It may be that some of these fees are even negotiable depending upon how much they want your business.
It is important to know that some fees are paid during the initial application process and others are paid once the mortgage has been completed. Many lenders will offer additional loans to assist in paying these fees.
Always ask for a breakdown of what each of the fees include. This is because it may be that several things have been set into one lump sum.
