What Fees Will My Lender Charge Me on My Loan?

While there are many fees that you’ll pay in the course of purchasing a home, and they can all be very confusing, only some of them are related to the financing of it. These other fees, in other words, would exist even if you were to pay cash for the property.

Origination Fee. This will likely be the highest of the several lender fees that you will pay. To go into a little more detail on this, the income that a lender makes comes in one of two forms. The first is through origination fees paid by you, the borrower. The other source of income is from the investor who buys your loan from your lender once it closes. The higher your interest rate, the more money the lender can charge in the sale of the loan to the investor.

That being said, though, to be competitive in the marketplace, a lender needs to be as low as possible on both the fees and interest rates they charge while still having something left over to pay their own bills. If you find yourself coming up short on funds to close, the option of accepting a higher interest rate to lower your lender fees (and hence closing costs) may be an option for you.

Processing Fees. These are just as they sound. There is quite a bit of overhead that a lender puts into a file before it is ever reviewed by an underwriter, which, if done in-house, is in itself another lender fee. Processing fees include various verifications, ordering of title, flood certification fees and others.

Remember that it costs nothing to meet with me to learn more about lender and other fees. I’m always here to help you understand all of the costs that you’ll come across when you finance a home.