Here's another smart post from Michael Corbett at Trulia. Check it out:
As I’ve warned before, getting a mortgage has never been more challenging than it is in today’s market. It's just a tougher environment.You never know where you’ll get the best deal for your mortgage these days and you don’t know who will say yes, given all that has changed in the mortgage industry.
On top of all of that, a mortgage typically comes with a set of costs, but it doesn't have to cost you a ton, if you're smart. Here are the fees to ask about and be mindful of when shopping for your mortgage:
- Points: Each “point” is equal to 1% of the loan amount. So 2 points on a $100,000 loan costs $2,000. You can use points to “buy down” the interest rate, meaning the more points you pay, the lower the interest rate. Points are also tax deductible, even if the seller pays some or all of the points.
- Origination fee: Sometimes lenders also call points “origination fees.” Keep an eye out for this confusing wording.
- Credit report fee: You may have to pay for this yourself, though the fee is minimal. Some banks and brokers will go ahead and just cover it themselves and it doesn’t hurt to ask.
- Property appraisal: This can run from $300 to $600 depending on the size of the house. Some banks and brokers will cover this cost; others will ask you to pay for it.
Lots of other fees will arise as well, such as document preparation and courier fees. As you get further along in the home buying process, you may be able to negotiate away or reduce many of them during closing.
Also, BEWARE of the bait and switch. It can happen to the best of us. This is why it is so important to review your documents way ahead of time, the moment they arrive.
And also, have it all in writing. If your mortgage broker quotes you a rate over the phone, write it down and then read it back to her. Also ask if there are any points on the loan and then write that down, too. Even the best of us get stuck if we don’t keep close track.