Know the Fees and Costs Associated with Home Financing

• This article describes some of the fees and costs associated with home financing. It’s part of our six-step guide to obtaining home mortgages on Florida’s Emerald Coast.

Understanding Home Financing Fees and Costs

Application Fee

The application or processing fee is the cost associated with submitting your home loan application to the lender. Often, these fees are nonrefundable. Be sure to ask your lender up front.

Appraisal

Your lender will most likely require a home appraisal. The appraisal will help determine the home’s fair market value, so they can make sure the loan amount is not more than what the property is worth. Sometimes, the cost is included in the loan application fee;  sometimes, you need to pay for it separately.

Annual Percentage Rate (APR)

The annual percentage rate reflects the fees and costs associated with the loan, along with the interest rate. Therefore, APR provides a more accurate picture of how much you’ll have to pay over looking at just the interest rate alone.

Credit Report

Lenders will review your credit report before they approve your home financing. The fee is usually under $50.

Index

Lenders use an economic indicator or “index” when figuring out the interest rate for adjustable rate mortgages.

Points

Mortgage “points” are a pre-paid interest payment that can help lower your home loan interest rate. Paid at closing, points may or may not work in your favor. Usually, you need to have the mortgage for a certain length of time before you can recoup the expense. As a result, you may want to check with your tax adviser to determine if points make sense based on your situation.

Pre-payment Penalty

Will your lender charge a pre-payment penalty if you decide to pay back all or part of the loan ahead of schedule? Find out the details of any pre-payment penalties before closing.

Other Fees

Finally, other fees could include recording fees, courier fees, title search, or other fees particular to your situation.

What Should I Do Next?

• The Next Step: A pre-approved mortgage can set you up for success

Do you have questions about buying properties on Florida’s Gulf Coast?

Call Thomas Williams at (850) 258-8670 or contact us online.

We specialize in homes, condos, waterfront properties, golf course homes, foreclosures, commercial real estate, new home construction and property developments. Our service areas encompass prestigious coastal communities in Northwest Florida. This includes Destin, Rosemary Beach, Seaside, Watercolor, Watersound, and Alys Beach. It also includes Panama City Beach, Pensacola Beach, Fort Walton Beach, Okaloosa Island, Navarre Beach, and Santa Rosa Beach. In addition, we serve other popular communities like Niceville and Freeport. They retain the old Florida feel and are close to the beach, bay, and rivers. Learn more about Florida’s Emerald Coast.