When you’re ready to buy a home, one thing that can come as a surprise is the number of mortgage fees you’ll encounter. It’s easy to think you’re all set once you get pre-approved for a loan, but there are several fees that add up along the way. Let’s take a closer look at these costs so you can be financially prepared.
1. Application Fee
Before you even get your loan approved, some lenders will charge an application fee to cover the cost of processing your mortgage application. This fee is usually non-refundable and can range from $100 to $500. It’s important to check with your lender upfront to know if this is a cost you’ll need to cover.
2. Origination Fee
The origination fee is the lender’s charge for evaluating and processing your loan. This fee is typically around 1% of the total loan amount, but it can vary depending on your lender and loan type. Be sure to clarify this fee when shopping around for mortgage options.
3. Appraisal Fee
Lenders require an appraisal to determine the value of the home you’re purchasing. The appraisal fee typically ranges between $300 and $500. While you pay this fee, it’s essential for ensuring that the property is worth the loan amount you’re applying for.
4. Inspection Fees
Depending on the lender and the property, you may also need to pay for inspections. These can include home inspections, pest inspections, and even mold or radon inspections. These fees can add up, so it’s important to budget for them. Home inspections generally range from $300 to $500.
5. Closing Costs
Closing costs are another important consideration. These costs cover a variety of items, including title searches, insurance, and attorney fees, as well as recording fees and escrow charges. On average, closing costs can range from 2% to 5% of the loan amount.
6. Private Mortgage Insurance (PMI)
If you’re putting down less than 20% of the home’s purchase price, you may be required to pay for private mortgage insurance (PMI). PMI protects the lender in case you default on your loan and can cost anywhere from 0.3% to 1.5% of the loan amount annually.
How Life Planner Can Help
Understanding and tracking all these mortgage fees can be overwhelming, but Life Planner is here to help you stay organized. With features like budget tracking, loan amortization, and expense management, you can keep an eye on how your mortgage fits into your overall financial picture. You can also track your savings goals and plan for future expenses with ease.
If you want to take charge of your financial journey and be fully prepared for all your mortgage costs, download the Life Planner app now:
With Life Planner’s comprehensive financial tools, you’ll have everything you need to manage your mortgage, budget effectively, and achieve your homeownership dreams. Download the app today and start tracking your mortgage payments and related fees!