What Are the Lender’s Fees I’ll Be Charged for My Mortgage?

• Lenders used to charge a flat fee for their services, but as interest rates have fallen most lenders instead charge separately for several different services that used to fall under the flat rate.  Some mortgage experts charge that lenders are trying to make up for lost revenue through such schemes.
• Federal law requires that lenders provide a written, good-faith estimate of the closing costs, but it’s still a good idea to shop around for the best value, negotiate any questionable fees, and ask for a full explanation for every one.
• Here’s a list of fees you may expect lenders to charge you (although different lenders may use different names):

1. Loan service fees – the lender’s points is also called a “service fee.”  It’s the largest fee paid to the lender and usually runs between 1 and 3 percent of the loan amount.
2. Loan application fee – it’s usually not refundable, so you’d better make sure you’ll get the loan before applying.   Between $0-$350.
3. Lender’s credit report – the lender may pull two reports on you: one after the application, and one just before closing.  You only pay once, however, usually between $40 and $60.
4. Lender’s processing fee – here the lender is charging you for the cost of processing the loan.  It’s usually between $75 and $125.
5. Lender’s document preparation fee – the cost of preparing loan documents for the closing.  Between $0-$200.
6. Lender’s appraisal fee – lenders are supposed to charge no more than their cost for having a house appraised. Between $225-$350.
7. Lender’s tax escrow service fee – a one-time charge to set up and service your real estate property tax escrow.  Between $120-$300.
8. Title insurance cost for the lender’s policy – most times, this will be a flat fee.  If you want a title insurance policy that’ll pay you if there’s a problem, however, that’ll cost more.  Between $120-$300.
9. Special endorsements to title – if the lender requires extra title endorsements (such as for a condo, an environmental lien, etc.), the buyer must pay for them.  They usually cost from $15-$50 each.
10. Pre-paid interest on the loan – the per-day interest charge on the loan from the day of the closing until the last day of the month in which you close.  This is paid at closing because the lender has to calculate it by hand.  After that, you skip a month and begin paying a regular monthly balance because the loan is paid in arrears.  The cost depends on the size of the loan and the interest rate.

• The above charges only include the lender’s fees.  There are other closing costs that can be expected as well.