When you are apply for a home mortgage loan, it is important to read the fine print and scrutinize it for fees that come under different names. Knowing these charges allows you to compare and find the best deals. Some of these mortgage fees are junk fees that can be avoided. The following are the top 5 mortgage fees that you should avoid.
Prepayment penalty fee or early repayment fee is a common fee charged on home mortgage loans. Prepayment fee of 1 – 5% is charged when you decide to settle the remaining loan amount of your home mortgage before the end of the agreed loan term. If you intend to prepay the loan, you should check with the lender whether the home mortgage that you are applying charges any prepayment fee. With the prepayment fee, it will probably not be worthwhile in prepaying the home mortgage even though you save money on the interest charges.
Missed payment fee is a penalty fee charged when you forgot to make repayment on a single billing cycle. If you keep on missing payment, it can lead to the foreclosure of your home. If you have a habit of missing payment on your mortgage, you should find a lender that waive this penalty fee. Being diligent in setting aside the needed money for the repayment is the best way to avoid any penalty charges for missed payments.
Various types of processing fees will be charged for covering the cost of processing your loan applications. Examples of processing fees on mortgages are application, underwriting, document preparation fee, origination fee, mortgage rate lock, loan processing and broker rebate fees. These fees can be reduced or waived if you are willing to spend time to negotiate with the lenders. Some lenders realize that consumers are smarter and know how to recognize junk fees so they would put the processing fees as all in one flat rate closing cost pricing.
A mortgage broker fee is a fee that is charged when you use a broker to find a suitable mortgage loan. The costs covered in the mortgage fees include underwriting and title searches. You can avoid this fee by doing research on the loan yourself online. Alternatively, you can choose a broker that will derive a commission from the lender so you won’t have to pay the fee.
Higher lending charge is charged on borrowers who are borrowing a high percentage to fund the purchasing of the home for example borrowing more than 90%. if you pay this charge, you will get covered by a type of insurance that will pay out in the event that you are not able to keep up with the bill payment. You can avoid the higher lending charge by finding a lender that does not charge this fee. Another way to avoid this fee is to save up more money to put in the deposit for purchasing the home.