Preparing for One-Time Closing Costs

By JJ Singh
Loan Page Columnist

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You found a great mortgage rate and you're about to close your loan. But wait a minute--your new home loan has several hidden fees.

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Mortgage Rates: Just the Beginning

After applying for a mortgage, your lender is required to provide you with a good faith estimate. This written statement explains what fees are associated with your new home loan and it will specify whether the fees are one-time costs or recurring.

One-time New Home Loan Fees

» Loan Origination Fee: These are generally referred to as "points." The more you pay in points, the less your mortgage rate is likely to be.
» Appraisal Fee: Because your home will serve as collateral, lenders need to know how much your home will be worth.
» Inspection Fee: For a new home, the lender must be assured that the home conforms to all local safety and regulation standards.
» Credit Check: Your personal credit is a critical part of the application process. Lenders will pull your credit report and charge a fee for it.
» Flood Protection: To be assured that your home is not located in a designated flood zone, you'll be required to pay for inspection and monitoring.

Negotiating the Terms of Your Loan

When negotiating fees with your lender, keep in mind that lenders are clever people. They may seem accommodating to you, but any discounts they give you may be offset by hikes in other costs, such as recurring fees. Scrutinize the good faith estimate, and above all, shop around.

Sources
Non-Recurring Closing Costs from the Lender

About the Author
JJ Singh is a loan consultant who has mortgaged his life away to the micro finance industry in New York City. He holds a bachelor's degree in Economics from the University of Virginia.

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