Finding the best mortgage rates around is a tricky process. Acquiring a mortgage today is becoming more expensive. Bankrate’s annual survey on closing costs shows that mortgage applicants on average are currently parting with six percent extra just to acquire a mortgage compared to 2013. Limiting the closing cost can be done in a number of ways, for one by shopping around, but also by learning how a zero-closing type of cost mortgage is done. Mortgage closing cost refers to the fees a customer pays to begin a fresh mortgage grouped into two areas.
Lender or Origination fees
In this case, the fees parted with are given hand in hand with the loan’s origination. This includes settlement statement line items like application fees, origination points or rate lock fees, among others. Origination fees usually appear under diverse labels from a product to another or a bank to the next. For example, the processing fee of one bank is the underwriting fee of another, such as FHA and VA loans that need specific loan fees that hardly exist with Freddie Mac or Fannie Mae loans. As a result of the way fees are usually labeled, those shopping for rates that are trying to compare the fee from a number of banks usually strike out and end up frustrated.
This is why fees are compared by ignoring the disclosure of good faith estimates of personal line items of a lender. Focus is generally on the origination charges of a lender with the sum including all kinds of fees and ensuring the comparison is easily made. On every GFE (Good Faith Estimate) section 800, the origination fees including the lender charges are usually summarized and listed.
Third Party Fees
The other closing costs method is known as third party charges or costs. These are generally the fees paid to other parties involved beyond the lender of the mortgage. Third party charges include the appraisals cost, settlement costs of the title company and credit report cost. Essentially, as you compare good faith estimates with others it is important to avoid paying too much attention to the listed third party charges. This is due to the fact that these charges are usually items that are fixed-cost, meaning you will pay the same for them with any banks you end up working with. The appraisal costs, costs of credit report and lender choice do not affect third party fees.
In 2014, as per the survey by Bankrate.com, the mortgage closing costs went up by 6 percent. The rise might look modest in terms of percentage but in terms of dollars, the rise is quite large, particularly for those living in Wisconsin, New York and Texas among other states not known for their low closing costs. Borrowers have a number of ways of paying their closing costs to their bank, such as paying the cost using cash at the point of closing, adding the closing cost to the loan balance, and waiving the closing costs through a zero-closing cost mortgage.