What fees can you expect to pay when submitting a mortgage application?
This can depend on your mortgage lender and the type of home loan you get. However, there are 3 primary mortgage application fees that are common throughout prospective lending institutions. These fees may be lumped together as one cost or detailed individually. They include the following:
The Mortgage Application Fee ― Varies among lending institutions and can range in price, up to $500. This fee is charged simply for doing business with a potential mortgagee. Know ahead of time if you will be approved as this fee is not refundable. If you are certain you will have no difficulty in obtaining a mortgage loan, shop for a lender who charges a nominal fee or no mortgage application fee at all.
The Property Appraisal Fee ― Varies among lending institutions, but can range in price up to $400.
The Credit Report Fee ― The cost of obtaining a credit report on the borrower and any co-borrower(s). The price can range from $25-$100 per individual.
Before discussing other fees that may or may not be assessed by your prospective lending institution, be aware that once you sign the mortgage application, you are responsible for paying the fees. Make sure you carefully review the loan application, ask for an explanation of questionable charges, and negotiate waivers or reductions on any fees that are arbitrary. Note that some fees are not arbitrary (including documentary stamps, credit reports, taxes, etc.).
Because of historically low mortgage rates, some lending institutions have chosen to tack on fees to offset their losses. Therefore, you must thoroughly review any fees associated with the mortgage application process.
Additionally, should your mortgage application be processed and accepted, there are a multitude of fees due at closing. Ask to see the Good Faith Estimate (GFE) or the HUD-1 Statement up-front, especially if you are confident that you'll be approved for the loan.
Other mortgage application fees that may be assessed include the following:
Origination Fee (or Service Fee) ― A fee charged by a prospective lender simply to get the mortgage application initiated. It may be a flat fee, or it may be equal to 1%-2% of the loan amount. Basically, this is the same thing as the mortgage application fee. Ask for clarification if you're unsure, and even consider asking to have it waived or reduced. It is also referred to as the Administration Fee.
Underwriting Fee ― The fee for the expert who reviews and assesses your mortgage application and recommends acceptance or rejection of your application. Not charged for government-backed FHA mortgage loans. This fee usually includes the following charges:
- Flood Certification Fee (determines if the property is in a flood zone)
- Commitment Fee
- Documentation Preparation Fee
- Wire Transfer Fee
- Processing Fee
- Tax Service Fee
Good Faith Estimate (GFE) ― Most lenders use the Good Faith Estimate (GFE), as required by the Real Estate Settlement Procedures Act (RESPA). The GFE is completed by the prospective lender and it details the loan costs for title search, title insurance, attorney fees, documentation filing, documentary stamps, pest inspection, flood inspection, local taxes, binder fees, notary fees, and other closing costs.
Most experts agree that you should submit a mortgage application to 3 or 4 different lending institutions and ask for a Good Faith Estimate (GFE). This will allow you to compare the overall costs of different home loans. Keep in mind, while the mortgage application fees are reasonable and customary, the mortgage closing costs are often arbitrary. It's in your best interest to review all the charges, ask plenty of questions, and request waivers or reduced fees before you sign on the dotted line.