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5: Make Your Housing Plan — Own

The Costs of Getting a Mortgage

Loan approved documentLenders are in a business to lend you money, but they don’t do it for free. When you decide to buy a home and get a new mortgage, you can expect to pay fees and other costs associated with getting the loan and closing the sale. 

Typical fees and closing costs associated with mortgages include:

  • Lender Fees – These are fees charged for processing the loan. There may be fees for application, loan origination, credit reports, etc. These fees often can be negotiated, so it pays to shop around. 
  • Discount Points are a type of fee that is paid at the time of the loan closing, usually 1 percent of the loan amount. Points are charged upfront to get a lower interest rate over the life of the loan. 
  • Fees Charged by Other Parties – These often include fees for searching the property’s title (to make sure it’s clear to be sold) and appraising the property (to make sure it’s worth what you’re paying). Others can include survey fees, attorney fees, closing fee, courier fees, home inspection fee and title filing fees. 
  • Prepaid Items – These amounts typically pay your interest and taxes; these funds typically are placed in an escrow account. Essentially you are prepaying your interest to the lender since you are living in the home until your first payment comes due. Likewise, you are paying property taxes into an escrow account that will be paid to the state at the end of the year. 

It’s important to review all fees before accepting the loan (and before closing). 

  • Never sign a document that has blanks to be filled in later.
  • Don’t sign a document that has terminology you don’t understand.
  • Only you can make the determination as to whether a loan is good for you. 

SAM tips

New mortgage process regulations went into effect in October 2015. If it’s been a while since you bought a home, see how these regulations help you at the Consumer Financial Protection Bureau website.

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