Applying for a loan is easy, and all of the fees are clearly explained at the start. This is something which nobody who has ever been through the process has said. And with good reason; it isn’t true! Mortgage lenders and banks hide their fees all the time until you receive your statement.
Of course, this isn’t to say that applying for a mortgage is impossible; there are just some things to know before you take the plunge. Namely, the amounts and types of fees you can expect to encounter.
Below is a list of some of the most common fees you can expect to come across.
The Account Establishment Fee
Straight off the bat, you are likely to see a charge for establishing your account. While, on the surface, this can seem purely administrative, it covers associated costs which your lender is charged by their underwriters and insurance companies. These costs are directly passed on to you, with the potential for there to be a slight increase added by your lender.
Account Maintenance Fee
Of course, once your account is all set up, it needs maintenance. Right?! Ongoing account maintenance refers to costs incurred when preparing your statements, calculating and determining interest, along with reporting your tax obligations. Each of these administrative tasks costs a small amount, which is all added up and passed on to you.
Early Repayment Fees
If you are taking on a mortgage with the idea that you will be making additional payments towards the installments, be sure to check with your lender first if this will work against you.
While it can seem like a good idea to help you drastically reduce the interest which you pay each month, it also removes a forecasted income stream from your lender. Of course, your lender isn’t going to enjoy losing their money and are likely to include a fee for each early repayment you make.
Lender Focused Title Insurance
Title insurance is often taken out by the title owner to cover themselves if their title is challenged. However, this doesn’t help the lender if the challenge is accepted and you no longer want to pay a mortgage for a property you no longer have a financial interest in. Lender focused title insurance cover your mortgage broker or bank if the title is removed from your ownership.
Just like you want to know that the products you buy from the Groupon Coupons page for Overstock are high quality and worth their value (they are) a mortgage lender will want to make sure they’re getting what they loan for. There are numerous inspections along the mortgage application journey which are designed to provide security to the lender that, if you default on your repayments, selling the property will recoup most, if not all, of the borrowed funds.
When it comes to applying for a mortgage, every lender will include their unique fees. However, this is a great list of the top five which you should be aware of and can raise with your lender when it comes time to negotiate the terms of your mortgage.