Other Lenders Fees

There is no shortage of up-front loan-processing charges for you to investigate when making mortgage comparisons. Understanding all of a lender's other fees is vital -- these fees come out of your pocket, after all. If you don't understand the fee structure, you may end up with a high-cost loan or come up short of cash when the time comes to close on the purchase of your home.

Ask each lender whose services you are seriously considering for a written itemization of all of these "other" charges. Just as some lenders have no-point mortgages, some lenders also have no-fee mortgages. If a lender is pitching a no-fee loan, odds are that the lender will charge you more in other ways.

Application and processing

Lenders generally charge $200 to $300 up front as an application or processing fee. This charge is mainly to ensure that you're serious about wanting a loan from them and to compensate them in the event that your loan is rejected. Lenders want to cover their costs to keep from losing money on loan applications that don't materialize into actual loans. A few lenders don't charge this fee; or if they do, they return it if you take their loan.

Credit report

Your credit report tells a lender how responsibly you've dealt with prior loans. Did you pay all of your previous loans back (and on time)? Credit reports don't cost a great deal, but you can expect to pay from $30 to $50 for the lender to obtain a current copy of yours.

If you know that you have blemishes on your credit report, address those problems before you apply for your mortgage. Otherwise, you'll be wasting your time and money applying for a loan for which you'll be denied.

Appraisal

Mortgage lenders want an independent assessment to ensure that the property that you're buying is worth approximately what you agreed to pay -- that's the job of an appraiser. Why would the lender care? Simple -- because the lender is likely loaning you a large portion of the purchase price of the property.

The cost of an appraisal varies with the size, complexity, and value of property. Expect to pay a few hundred dollars for an appraisal of most modestly priced, average-type properties.