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What do I need to know when looking for a mortgage?


What fees are APR fees?

The following fees are generally included in the APR:

•   Points- both discount points and origination points. 1 point equals 1% of the loan amount
•   Pre-paid interest- The interest paid from the date the loan closes to the end of the month. If you close on August 10th, you will pay 21 days of pre-paid interest

•   Admin Fee
•   Loan-processing fee
•   Underwriting fee
•   Document-preparation fee
•   Private mortgage-insurance
•   Escrow/Settlement fee

The following fees are sometimes included in the APR:

•   Loan-application fee
•   Credit life insurance (insurance that pays off the mortgage in the event of a borrowers death)

The following fees are normally not included in the APR:

•   Title or abstract fee
•   Attorney fee
•   Notary fee
•   Document preparation (charged by the closing agent)
•   Home-inspection fees
•   Recording fee
•   Transfer taxes
•   Credit report
•   Appraisal fee

What if I don't have enough for a 20% down payment?

Mortgage Insurance (MI)

If you don't have enough for a 20% down payment, typically you will have to pay mortgage insurance (MI). This is insurance for the lenders, in case you default on your loan.

FHA Loans

Paying MI can be expensive! Luckily, the federal government offers loan options through the Federal Housing Administration (FHA) and they pay MI for you. They have different types of loans to match your financial situation. Learn more from your loan officer.

Other options?

Some lenders will offer a no MI option without a 20% down. Ask your loan officer about what they offer that best fits your financial situation.

What other fees & costs should I be aware of?

Closing Costs

In additional to the down payment, you will have to pay closing costs, fees associated with your home purchase. You pay these when the title of the property is transferred to you. This is usually about 2 to 5 percent of the purchase price of your home. You can negotiate who pays these costs, whether you or the seller.

Hazards & Homeowners Insurance

Hazard insurance covers for structural damage caused by natural disasters. Homeowners insurance protects you against theft and damage to your home and belongings sustained in more mundane ways. Homeowners insurance often includes hazard insurance. Check your insurance options to make sure you are covered properly.

Property Tax

Property taxes are taxes paid to the local government on property you own. Once you buy a house, you will pay property taxes. These vary by cities and is based on the value of your new home.

Home Owners Association (HOA)

Some neighborhoods have a home owners association, which is a governing body within that community. If your new home is such a neighborhood, you have to pay monthly HOA fees. This fee is different depending on the neighborhood.

Stay tuned for more mortgage facts and information!