Auburn WA Real Estate : Mortgage Costs to Watch Out For when purchasing a Home in Auburn, WA
Faced with plunging property values and rising defaults, lenders are charging borrowers higher mortgage rates and adding fees. Not all of these added costs are set in stone, however. If you’re looking for a loan, vigilant shopping and a little haggling can go a long way toward landing a better deal. Yes, some closing costs are negotiable or removable all together. You will want to make sure your Homefront Realty buyer’s agent looks over your good faith estimate with you, they might be able to point out what we have called back in the day, junk fees.
Here are some fees you need to watch out for:
Just because an ad says “no application fee” doesn’t really mean there’s no fee to get the loan. Fees paid outside of closing typically include an application fee, an upfront property appraisal fee, and a credit check. They might be disguised as something like a “document processing fee” or “doc fee.”
Risk Adjust Rates
Getting deemed a risky borrower is no longer just a matter of a low credit score. Lenders now consider other risk factors. Buy in an area that has seen values drop precipitously and you can expect a higher interest rate.
Down Payment Penalties
The days of zero down on a mortgage are over. (except VA loans) Without a down payment of at least 20%, prospective home-buyers will undoubtedly get hit with a higher interest rate and need to pay for more points. (Each point usually amounts to a fee of about 1% of a mortgage.)
Also, if buyers can’t put 20% down, they’ll need to get private mortgage insurance, which typically costs 0.5% of the loan. Shopping around for lenders with more-favorable points and insurance charges can help lessen the blow. VA loans don’t carry PMI but do have a funding fee added to the loan amount.
Closing fees amount to 2% to 5% of a home’s price.
Ask potential lenders for a good-faith estimate of closing costs. Then check in weekly with whoever is handling the closing to see whether there are any changes in either lender or third-party fees.