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Hidden Fees

Hidden Fees in Financing a Home

Closing costs can be eye-opening to a first time home buyer or a home buyer who has not closed a real estate transaction in a while. It is important to anticipate the fees to financially prepare for the closing and avoid any unnecessary surprises.

Points are upfront charges that you pay to reduce your loan rate. They are a part of the cost of credit along with the interest rate. They are also tax-deductible!

Per diem (Latin for "by the day") interest is interest accrued from the closing date to the first day of the following month. This charge depends on what day of the month the loan closed. This is your first mortgage payment, made at closing.

Legitimate fees are fees paid to third-party vendors for loan services. They include such fees as:

  • Title Insurance
  • Escrow
  • Attorney settlement fee
  • Appraisal fee
  • Courier fee
  • Credit report fee
  • Notary fee
  • Recording fees

Even these legitimate fees may be inflated. For example, a lender may charge $100 for a credit check that really only costs $25. Do not hesitate to ask if some of these fees can be lowered.

Hidden fees - upfront charges made by a lender. These hidden or "junk" fees are expressed in dollars; they are charges itemized as closing costs and they may give the home buyer an opportunity to negotiate.

Beware of Hidden Fees When Financing a Home

There are a wide variety of fees that a lender may add to your costs for processing your loan. Such fees to be aware of include:

  • Application fees
  • Underwriting fees
  • Processing fees
  • Warehouse fees
  • Administration fees
  • Amortization fees
  • Affiliate consulting fees
  • Bank/lenders inspection fees
  • Endorsement fees
  • Express mail fees
  • Document preparation fees
  • Origination fees
  • Miscellaneous fees (anything else they want to add)

Lenders are required to provide in writing a “good faith estimate” within 3 days of receiving a loan application. You may have time to negotiate or eliminate fees before closing. Once you approve the terms of the loan, be sure you have them in writing and take that with you to the closing, where you should carefully review the charges before signing off. Review them with your MABA buyer agent to evaluate the opportunity to lower your costs whenever possible.

 
 
 

Latest from the Blog

  • Closed Home Sales Down in April After Record Inventory Lows and Rising Prices

    Median Sales Prices Have Seen Year-Over-Year Increases for 19 Straight Months

    WALTHAM, Mass. – May 23, 2017 – The Massachusetts Association of Realtors® (MAR) reported today that low inventory and rising prices caught up to the spring market, with single-family home sales decreasing over eight percent from this time last year. Both single-family and condominium prices saw a hike. Condominium sales decreased almost 10 percent from April 2016.

    April Closed Sales:

    Single-Family April 2017 April 2016 %Change
    Sales 3,735 4,082 -8.5%
    Median Price $362,500 $349,900 +3.6%
    • Closed sales have been down for four out of the last 12 months
    • Median prices have been up or flat for 16 out of the last 17 months
    Condominium April 2017 April 2016 %Change
    Sales 1,455 1,607 -9.5%
    Median Price $345,000 $329,950 +4.6%
    • Closed sales have been down for four out of the last 12 months
    • Median prices have been up or flat for 16 out of the last 17 months

    “With the current trend of plunging inventory and rising prices, the odds were strong that sales increases of the winter market would be unsustainable through the spring,” said 2017 MAR President Paul Yorkis, president of Patriot Real Estate in Medway. “The demand is there; we just need more homes on the market to satisfy that demand.”

    Inventory and Days on Market:

    Single-Family April 2017 April 2016 %Change
    Inventory 13,234 19,392 -31.8%
    Months of Supply 2.7 4.0 -32.5%
    Days on Market 81 107 -24.3%
    New Listings 7,706 8,513 -9.5%
    • 62nd time in the last 63 months of year-over-year inventory decreases
    Condominium April 2017 April 2016 %Change
    Inventory 1,455 1,607 -9.5%
    Months of Supply 2.0 2.8 -28.6%
    Days on Market 60 78 -23.1%
    New Listings 2,640 2,971 -11.1%
    • Inventory down for 16 out of the last 17 months

    “Unfortunately, our existing level of inventory makes it hard for us to meet our current and future housing needs,” said Yorkis. “If we don’t do anything soon, it will have a negative impact on the entire Massachusetts economy.”

    If you are thinking of buying a home anywhere in the state of Massachusetts, it is in your best interest to work with a member of the Massachusetts Association of Buyer Agents. These men and women are dedicated to working exclusively on your behalf to ensure that you have the best possible home-buying experience. Find a MABA agent here.