There are several different fees that buyers incur in financing their new homes; some of these go directly to the lender, others go to third parties involved in the transaction.
First time buyers, in particular, may not be aware of these additional costs. Be prepared: Here are some fees you should know about before beginning your home search.
Origination Fees These are fees paid directly to the lender and include mortgage origination fees, processing fees, and admin fees, among others.
Third Party Fees This is where a lot of additional costs arise. They include fees to appraisers, attorneys, home inspectors, and title companies.
In dealing with title companies, it’s customary for the seller side of the purchase transaction to decide which title company to use. This means the seller effectively decides what those fees will be. When you as a buyer are given a “Good Faith Estimate” at the beginning of the loan process, it may not include title costs. Often your lender will overestimate these; it’s better to overestimate initially than risk suffering sticker shock at closing.
In addition to title insurance, title costs may include the costs of the closing, document delivery from the lender, and other fees.
Recording Fees Depending on where you live, there may be state, county, and sometimes municipal recording and transfer taxes to pay. These fees allow the title company to forward the proper documents to the appropriate recording body.
Be aware of these costs and consult your mortgage professional to help navigate the financing process successfully.