American Eagle Realty's Blog
Mortgage lenders are busy people. Despite the fact that they sit with you and go over your mortgage, they may not cover finite loan details, the types of details that could cause your mortgage payments to spike seemingly out of nowhere. These are the very details that could push your monthly mortgage payments out of your reach.
Avoid sneaky mortgage fees and penalties
To protect yourself from signing a mortgage with hidden financial dangers like unnecessary fees and penalties, ask questions. Also, meet with your realtor and ask him to tell you what to expect during the loan signing process. This will help to familiarize you with the different stages of the house price negotiation and final closing process.
Questions to ask your realtor should focus on details like closing costs, mortgage application fees, mortgage insurance and title fees. Another item that you want to get clarity on is the exact dollar amount or percentage of your home's value that you have to pay in property taxes. Find out about fines and penalties that are associated with late property tax payments in the jurisdiction that you buy a house in.
Answers that your realtor gives you during one-on-one meetings will help you to budget your way through the entire house buying process. Don't be intimidated by your realtor's breadth of real estate knowledge. Ask as many questions as you need.It's better to ask questions before you meet with a lender and sign a mortgage than after you've bought a house and start struggling to keep up with your mortgage payments.
More questions for realtors and lenders
In addition to meeting with your realtor to discuss common mortgage fees, ask the lender who you work with about lesser known fees and penalties associated with your particular loan. Find out the percentage of penalties for:
- Submitting payments late (Also, find out if you have to pay higher late penalties if you are more than 10 days late paying your mortgage. Another thing that you want to get information on is how late penalties are calculated. For example, will you have to pay a straight $15 if you're late with your mortgage or will you have to pay 2% of the total cost of your monthly mortgage?)
- Paying extra on your principal (There shouldn't be penalties for paying more on your principal, but it doesn't hurt to ask.)
- Refinancing your mortgage (in the event that an unexpected event puts you in the position of needing to refinance your mortgage)
- Drive by inspections (These inspections occur when a lender sends an inspector by to evaluate a house after you have purchased the house. Make sure that you don't get stuck with these additional inspection fees.)
A mortgage may get scary if you don't know what you're stepping into. Regardless of the lender you finance your house through, you'll likely have to pay for more than the price of the house. Make sure that the total amount of your mortgage doesn't find you paying more for a loan than the house is worth. You can do this by asking smart questions throughout the entire house shopping, loan negotiation and mortgage closing process.