The cost of a home is part of the price of home purchasing. Unless a buyer gets enough cash to pay money, she’ll need to go through a mortgage lender to obtain a home, and that will involve paying many fees. The prices vary from lender to lender, but mortgage prices generally equal 3 to 6% of the house’s price.
Interest
Is going to have to pay back the lender rates. The interest rate could be fixed or adjustable, rising or falling occasionally depending on the prime rate or some other indicator. Adjustable-rate mortgages include a low starting rate, but can rise much higher than the interest on fixed-rate mortgages.
Mortgage Insurance
If a home buyer makes less than a 20 percent down payment, the lender will likely need mortgage insurance. Mortgage insurance protects the lender in the event the borrower defaults on the loan. Once the borrower pays down the mortgage below 80 percent of the property’s worth, he can ask the lender to cancel the insurance.
Title Insurance
The home is collateral for the mortgage, so the lender wishes to understand the borrower actually has title to it. A title insurance provider will research the ownership history for any problems that could impair the title. The title insurance premium is usually paid by the buyer.
Other Settlement Prices
Settlement or closing costs are the fees lenders charge for processing a credit and qualifying a buyer. They include an underwriting fee, program fees, an appraisal fee and a credit check.
Points
By prepaying things, homebuyers lower the amount of interest they pay on the mortgage loan in return for a bigger payment at closing. One point, Bankrate.com says, is equivalent to 1% of the size of the loan. On a $200,000 loan, then, one point equals $2,000.