The Truth About ‘No Cost’ Loans from Home Lenders

Here's an estimate of what you can typically expect to pay for your mortgage

Insurance Costs for Your Home Loan

When you get a mortgage, lenders also require you to pay the upfront cost of buying title insurance. Title insurance protects your lender if any problems arise with the title (or ownership) of your property, due to a tax lien, judgment or some kind of encumbrance on the title.

Title insurance costs vary greatly nationwide, partly because the title insurance premium you pay often covers different services, depending on the company you use and where your home is located. For example, in some places your premium simply covers the lender for any title-related losses. In other places, though, the premium covers losses, as well as the cost of a title search, title examination, and closing services. Title insurance also varies based on the size of the mortgage.

Watch Out for “Junk” Fees Charged By Some Lenders

If a lender touts its loans as having “no points” or origination fees, they’re typically making up for it by offering you a higher-rate loan. Also, even with a “no point” loan, don’t be fooled into thinking you won’t be hit with other miscellaneous charges.

Junk fees are those charges imposed solely to add to a lender’s profit margins. In many cases, these fees have legitimate or official sounding names, like “document preparation fee.” In truth, however, they’re really just creative ways for lenders to pad their bottom line at your expense.

Many lender charges that have the word “fee” attached them are a dead giveaway that you’re being charged for services that lenders are supposed to provide anyway in the normal course of business.

If you get charged for an “underwriting fee,” a “loan review fee,” a “warehousing fee,” or other such nonsense, do not hesitate to ask the lender to waive those fees – or at least substantially reduce them. Even things like the “application fee” or the “loan processing fee” can be eliminated or cut, if you are savvy enough to ask.

“Ask The Money Coach” is a syndicated column written by personal finance expert Lynnette Khalfani-Cox, co-founder of the free financial advice blog, AskTheMoneyCoach.com. Follow Lynnette on Twitter at @themoneycoach.

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