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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

  • Massachusetts Pending Home Sales and Median Price Up Again in June

    The Massachusetts Association of Realtors® (MAR) reported today that single-family pending home sales were up over nine percent in June from last year. Pending condominium sales were also up more than 12 percent. The median price for both single-family homes and condos saw a hike, with the single-family median price rising over the $400,000 mark. Realtors® confidence both in the market and in home prices dipped slightly in June. This month’s “Hot Topic” question finds that the majority of Realtors® surveyed have had at least one transaction that was an all-cash deal (i.e. no mortgage involved) since the beginning of the year.

    June Pending Sales: 

    Single Family June 2017 June2016 % Change
    Sales 6,723 6,128 9.7%
    Median Price $410,000 $380,000 7.9%
    • Pending sales have been up 51 of the last 52 months 
    Condominium June2017 June2016 % Change
    Sales 2,596 2,307 12.5%
    Median Price $370,000 $349,900 2.9%
    • Pending sales have been up or flat 20 of the last 22 months 

    “The increase in homes put under agreement this month may be a positive sign for a spring market that has suffered plummeting inventory,” said 2017 MAR President Paul Yorkis, president of Patriot Real Estate in Medway. “However, median prices have continued to rise, which can push some buyers out of the market.”

     
    Realtor® Market and Price Confidence Indexes: 

    Confidence Index June2017 June2016 %Change
    Market 80.73 80.97 -0.29%
    Price 71.79 73.87 -2.82%
    • The Realtor® Market Confidence Index went down for the first time in 27 months
    • The Realtor® Price Confidence Index went down for the first time in six months
    • 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  

    “The Realtor® Market Confidence Index has dipped year-over-year for the first time in over two years, indicating that Realtors® are growing concerned about some of their buyers being able to succeed in this market,” said Yorkis. “However, both indexes reveal that ultimately Realtors® remain positive. We just need to see more inventory to keep up with the demand.”

    With home inventory being as tight as it is, you want to give yourself every advantage if you are thinking of buying a home in Massachusetts. For the best possible experience, be sure to work with an agent who is a member of the Massachusetts Association of Buyer Agents.