Home Buying Guide: Loan and Lender Fees within Closing Costs

Within the variety of closing costs you may encounter while closing on your newly purchased home, you may see particular loan/lender fees. These will be reflected as mortgage costs.
When you obtain a mortgage there are fees charged by the lender. These particular fees vary from bank to bank, therefore, it is a good idea to shop around when choosing your loan officer. The most common loan/lender fees are listed below.

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Loan Origination:  this fee is the lender's cost of obtaining the financing for your purchase.  Normally, the fee is calculated as a percentage of the loan amount, but some lenders do charge a flat dollar amount.  There are also application and administrative fees.  Your loan officer is obligated to disclose their fees to you directly. 

Credit Report Fee:  mortgage lenders require a credit report to determine whether or not you are eligible for a loan.  The minimum credit score varies from loan type to loan type.  The higher your credit score the less risk you are to lend to.  Your score will also be used in judging how much a lender will loan you and at what interest rate.

Loan Discount:  This fee is commonly known as "points".  A loan discount is a one time fee charged by the lender that can give you a lower interest rate on your loan.  Each point is 1% of the mortgaged amount.  Typically this fee is paid upfront.  

Appraisal Fee:  An appraisal fee covers the costs of getting a written estimate on the current market value and condition of the home you wish to purchase.  An appraisal report is a requirement of your lender in order to obtain approval on your loan.  Appraisers must be licensed and an independent/impartial to the transaction.  Your lender will handle ordering the appraisal at the appropriate time in the transaction (after the home inspection contingency's have been removed).

For more information on closing costs click here.