Nowadays, it’s more important than ever to save money. One way to do this is by learning how to reduce mortgage fees. Fortunately, there are a lot of ways to do it.
What are mortgage fees?
Mortgage companies charge fees for their time and expertise just like any other businesses. One of the biggest fees that you will encounter is the origination fee. It represents the loan officer’s commission and is calculated as a percentage of the loan amount. As of 2016, it is 1% of the loan amount. THe origination fee is the largest of the mortgage fees, but there are others as well. They come from charges that lenders incur and pass on to borrowers. The credit report fee is one of them.
How to reduce mortgage fees
1. Bring down the origination fee
Since the origination fee is 1% of the total loan amount, a home worth more than a $100,000 will come with an origination fee of at least $1,000. To bring this amount down and make sure that you’re not just throwing money away, you can make a larger down payment. This money is not just thrown away, because you invest it into your home.
2. Shop around
Visiting different lenders and checking out what they have to offer is the best way to save money. Fortunately for us, the homebuyers, mortgage companies are always competing against each other to have us as customers. It shouldn’t surprise you if you see them slashing fees just to get your business.
If you visit multiple lenders, the chances of you getting the mortgage that you want, with the fees that you want, are a lot higher.
3. Don’t always go for the lowest interest rates
As a general rule, the lower the interest rate, the higher the fees. If you want to keep a mortgage for many years, the lower interest rates will help you. But, if you want to pay less in mortgage fees, then you should take a slightly higher rate.
4. Rewards programs are your friends
Banks sometimes offer mortgage discounts to clients who conduct other business with them. If you keep a large enough amount of money in your bank, you should ask them to reduce your fees.