Understand the
numbers

A home loan comes with several financial components. Understanding these costs can help you budget effectively.

1. Credit Report:

• A report detailing your credit history, usually costing under $50.

2. Application & Processing Fees:

• Fees for processing your mortgage application, typically a few hundred dollars.

3. APR (Annual Percentage Rate):

• Represents the true cost of your loan, including interest and fees.

4. Loan Indexes:

• Used to determine the interest rate changes for ARMs.

5. Points:

• A fee paid upfront to reduce interest rates, typically ranging from 0.25% to 2% of the loan amount.

6. Appraisal Costs:

• Fees for determining your home’s market value to ensure fair pricing.

7. Miscellaneous Fees:

• Includes notary, courier, and county recording fees.

8. Prepayment Penalties:

• Some lenders charge a fee if you pay off your loan early.

Always review your Loan Estimate and Closing Disclosure to understand the total cost of your mortgage. Being informed can help you save money.