Questions About Mortgage Costs
Questions About Mortgage Costs
What will a loan cost?
Your monthly payments go partly to repay your loan and partly to pay the fees for your loan, many of them relating to the closing or settlement.
Most lenders require an up-front application fee to cover their expenses as they approve you. But, ditech doesn’t. That’s right – with us, it’s free to apply!
Additionally, some lenders charge a loan origination fee. It’s generally expressed as a single point (a point is defined as 1 percent of your loan amount). For example, if you were borrowing $100,000, your loan origination point would be $1,000 ($100,000 X 1%).
The typical fees that cover the loan processing and closing are:
Lender Fees
- Origination fee
- Appraisal fee
- Credit report
- Inspection fee (newly constructed homes only)
- Underwriting fee
- Document preparation/review fee
- Tax service fee
- Mortgage insurance
Title charges
- Attorney’s fees
- Title insurance
- Transfer tax (excludes refinances)
- Recording tax
Miscellaneous charges
- Property survey
- Termite inspection
Prepaid expenses (not part of the actual cost of the loan, but included with payment)
- Prepaid interest (interest that accrues between closing and the end of the closing month – paid in advance)
- Homeowner’s insurance
- Real estate taxes
What are the costs that are included in my loan payment?
At the least, your loan payment will consist of the principal and interest for one month. In some states, you may elect to have your insurance and taxes prorated and added onto the monthly cost. In other states, it may be required that you pay for insurance taxes as part of your monthly loan payment. This money would be placed in an impound or escrow account by the lender.
What does rolling in these fees mean?
Typically you have the option of rolling fees into your loan amount. This allows you to get your loan with no out-of-pocket expense, but your loan amount will be slightly higher. The alternative to rolling the costs into your loan is to provide these funds yourself when the loan closes. You’ll be borrowing a smaller loan than with a roll-in, but you will incur immediate out-of-pocket expenses.