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talked to some lenders, some have asked for a $ 450 advance to begin the process…is this normal? tahnsk.
to process the loan the originator asks for $ 250 processing fee…then, the appraisal fee for $ 350.

4 Thoughts on what are the fees associated with a first-home loan?
  1. Reply
    January 25, 2013 at 4:28 pm

    No. If your broker or lender wants an application fee, find another broker or lender. Unless you have severe credit issues, there’s no reason for paying for anything other than an appraisal before you close your loan.

  2. Reply
    January 25, 2013 at 5:24 pm

    Ask your Agent to put you in touch with Rural Development. They have great first time programs. Shop around for rates and fees. By the time you get the Good Faith Estimate it is a little late to change lenders.
    As for an application fee that depends upon where you are. What ever is usual and customary.
    Good Luck

  3. Reply
    mortgage help
    January 25, 2013 at 6:03 pm

    never give money upfront unless you are actually paying for something like the credit report or appraisal.

  4. Reply
    January 25, 2013 at 6:27 pm

    We recently bought our first house, and I used a mortgage lender who is also a close friend, so I know we didn’t get taken advantage of.

    The money they ask for up front, at least in our in case, is for appraisal and credit check. $ 450 seems a bit steep for the two, but then again, they aren’t really cheap either. A credit check might be about $ 50 and the appraisal might be about $ 150. You could shop around and see if someone else is cheaper, but in any case, paying for appraisal and a credit check up front makes sense because the lender has to pay someone else to have them performed and would be out the money if you decided not to buy the home and borrow the money. Besides those two fees, I can’t think of any other fees you should be willing to pay before the closing. We didn’t pay any, anyway. Whatever you do, make sure the lender has a good reputation and doesn’t seem to be hiding anything. If you have your doubts, it’s good to ask people here.

    At the closing, you can expect to pay a loan origination fee, which is how the broker makes money. That’s often about 1% of the loan. You also might pay discount points if you choose to get a lower interest rate in exchange for points. (If you are pretty sure you won’t move or refinance within the next 5 or so years, it’s usually worth it to pay points for a lower rate.) You also will pay a few hundred dollars to the title company (which may or may not be the same company as your lender). I already mentioned the appraisal and credit check. If you are borrowing more than 80% of your home’s value, you will likely have to pay private mortgage insurance every month (including at your closing) until you have enough equity in your house to stop paying it. (There are ways to avoid PMI though, like taking a second loan for 15% of the home’s value.) You probably will also have to pay several hundred dollars for mortgage tax and a mortgage recording fee. Flood certification is another thing you can expect to see, but it’s not much. Title insurance is a few hundred bucks, which protects the lender if there’s a problem with your title, e.g., someone comes along a few years later and has a legitimate claim to a portion of your property. You can buy title insurance for yourself too if you want to pay even more money. There might be a few other fees, but none of them should be significant. Fees will vary a bit from state to state.

    Besides all the above fees and taxes, you will also have to pay a few months reserve of home owners insurance and property tax. In most cases, you will pay these for a few years via an escrow account set up by your mortgage company. In some ways, this is a convenience to you, but in other ways, it’s obnoxious and forces you to pay insurance and property tax ahead of time without getting interest.

    You should get a good-faith estimate from your prospective lender, which should be pretty close to what you’ll actually have to pay. You can also hire a lawyer to represent you through the process, but then again, that’s another expense you might be better off not having.

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