Tuesday, February 15, 2005

Mortgage Loan Points and Fees

The other 2 main factors, in addition to rate, that you must consider when applying for your new mortgage loan are Points and Fees. These can vary greatly from lender to lender and can greatly affect you total out of pocket expenses as well as monthly payment if rolled into the loan, as occurs during a refinance.


Points are fees paid to the lender or broker for the loan and are often linked to the interest rate; usually the more points you pay, the lower the rate.
Check your local newspaper for information about rates and points currently being offered. Ask for points to be quoted to you as a dollar amount—rather than just as the number of points—so that you will actually know the dollar amount you will have to pay.


A home loan often involves many fees, such as loan origination or underwriting fees, broker fees, and transaction, settlement, and closing costs. Every lender or broker should be able to give you an estimate of its fees. This estimate is actually required by law to be provided within three days of applying for the loan, and is known as a Good Faith Estimate. Many of these fees are negotiable. Some fees are paid when you apply for a loan (such as application and appraisal fees), and others are paid at closing.

In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. "No cost" loans are sometimes available, but they usually involve higher rates. Ask what each fee includes. Several items may be lumped into one fee. Ask for an explanation of any fee you do not understand.


For a complete explanation of the hottest new mortgage products, including all rates and fees.......contact:

Don Bethune


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