When taking on a mortgage loan, most people focus on the size of their monthly payment. However, a number of other costs are involved in securing a mortgage, as well. The specific amount of these costs will depend on loan rates, lender fees and various other factors associated with your loan. At Starboard Financial, we can help you weed through the process so your understanding of mortgage costs will grow.
Possible Upfront Costs
Some of the costs you will pay when taking out your mortgage include:
- Closing Costs – At closing, you will pay various third-party closing costs, including the cost of title insurance and appraisals.
- Origination Fees – Origination fees are expenses incurred for the creation of your loan. These expenses include your application fee, underwriting fee, processing fees and administrative fees.
- Points – If you are paying points to obtain a lower interest rate, you will pay them at closing. Points are calculated as a percentage of the base loan amount.
- Deposits/Prepaid Expenses – Most lenders will require you to make a deposit equal to your first year’s homeowner’s insurance premium and a portion of your real estate taxes at closing.
- Accrued Interest – At closing, you will pay the interest that will accrue on your loan during the time between closing and the end of the month.
- Government Fees and Taxes. – Government fees and taxes include all fees charged by your local government for the transaction.
Your Mortgage Payment
Your monthly mortgage payment itself won’t become due until at least one month after you have completed the closing process. This payment includes the following components:
- Principal – This portion of the payment goes toward the balance of the loan.
- Interest – This portion of the payment is part of the cost of borrowing money.
- Homeowner’s Insurance – Homeowner’s insurance payments go toward the policy that covers your home in the event of loss.
- Property Taxes – Real estate taxes are collected by the local authorities.
For more information about mortgage expenses or to check the latest loan rates, contact Starboard Financial. We have offices in both Arizona and Illinois, as well as loan officers nationwide who are ready to assist you.