Fees and Charges to Consider When Applying for a Mortgage

When you apply for a mortgage,you face a number of fees and charges that quickly drive up the amount of cash you borrow or must pay upfront. If you're looking to buy a home and submit a mortgage application, it's important to understand exactly what those fees include.

Credit Reports

Some mortgage companies will combine fees and charges and roll them into your mortgage amount, but that is not always the case. When you apply for a mortgage, you will be responsible for your credit report. This ranges in price from one financial institution to another, but expect to pay approximately $10 to $15 per applicant. According to MSN, the average credit report fee for a couple was $25 in 2012.

Appraisals

An appraisal of the home you want to purchase is also your responsibility. Mortgage lenders will not just go with the value listed by a realtor or broker, they have licensed home appraisers look at the home and compare the value to town records, neighboring homes that have recently sold, and land costs in a town or city to come up with the home's actual value. Appraisals can range in price from $200 to $800, depending on the appraiser.

Title Searches

The financial institution also hires a professional to research the title of the home you wish to purchase. The title search agent ensures there are no liens or problems with the deed of home you wish to purchase. A title search fee can cost anywhere from $100 to $1,000, depending on the results of the search. Finding prior liens can become problematic.

Inspections

This may be a voluntary charge with some banks, but it is one you should carefully consider. While a home appraiser looks at the value of the home you wish to purchase, a home inspector looks at potential issues that can make that house need repairs. An inspector looks at the condition of the windows and doors, electricals, plumbing, heating and cooling system, framing, roofing, and siding. If there are immediate problems you would need to have fixed, the inspector alerts you to them. This allows you to negotiate the asking price of the house to include necessary repairs or code violations. An inspection generally ranges in price from $200 to $500, per JP Morgan Chase, depending on the size and location of the home.

Postage and Document Delivery

Postage and fax fees are charged when lenders have to mail or fax documents to other banks or institutions. Typically, these fees cost upward of $75, but some mortgage lenders will include them in the origination fees.

Origination Fees

Speaking of origination fees, they are one of the larger fees you face. This is the cost of having underwriting look at and deny or approve your loan, paying lawyers to prepare paperwork, and includes the points attached to the interest rate you've chosen. Expect these fees to be approximately 10 to 20 percent of your requested loan amount. Bankrate did a study of origination fees and found Texas to be the second highest in the U.S. with average fees on a $200,000 mortgage coming in at just under $4,000.

When you apply for a mortgage in Austin, carefully look over the Good Faith Estimate and check the prices you are quoted. You may be able to save money by hiring an appraiser, inspector, or title search agent that is not in partnership with the financial institution. Shop around for the best rates and save money on your new mortgage loan.