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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

  • Pending Sales for Massachusetts Homebuyers Maintain Steady Year-Over-Year Increases for Almost Four Years This February

    WALTHAM, Mass. – March 14, 2017 – The Massachusetts Association of Realtors® (MAR) reported today that ongoing buyer demand pushed pending sales up three percent over last year. Pending sales have been up 47 of the last 48 months, marking almost four years of positive gains in single family homes put under agreement. Realtors® confidence both in the market and in home prices was positive in February. 

     February Pending Sales:  

    Single Family February 2017 February 2016 % Change
    Sales 3,967 3,852 3.0%
    Median Price $330,000 $309,000 6.8%
    • Pending sales have been up 47 of the last 48 months  
    Condominium February 2017 February 2016 % Change
    Sales 1,558 1,566 -0.5%
    Median Price $313,000 $290,000 7.9%
    • Pending sales have been up or flat 17 of the last 18 months  

    “Buyers have been tireless these past four years, showing that the desire to live and work in Massachusetts is strong despite dwindling inventory and rising prices,” said 2017 MAR President Paul Yorkis, president of Patriot Real Estate in Medway.  

     Realtor® Market and Price Confidence Indexes:  

    Confidence Index February 2017 February 2016 %Change
    Market 75.20 68.66 10%
    Price 77.00 75.70 2%
    • The Realtor® Market Confidence Index was up for the 11th straight month
    • Measured on a 100-point scale, a score of 50 is the midpoint between a “strong” (100 points) and a “weak” (0 points) market condition  

    “This is the highest recording Market Confidence Index for the month of February since we began recording the data in 2008,” said Yorkis. “This speaks to the strength of the market this past year, as well as looking ahead to the spring market of 2017."