Secret #4 To save $$$ when buying

Know important loan terms

OK, so you’ve decided you know how much you want to put down on a home. You need an understanding of some loan terms and how they affect your loan. Your lender will likely discuss these with you in their "Loan Good Faith Estimate", but if not don't hesitate to ask.

ORIGINATION FEE. Watch out here! This is what most mortgage companies charge to “originate” your loan. And it’s pure profit for the mortgage lender. The traditional fee is 1% of your total loan amount. If it is more than 1% you need to know why.

LOCK PERIOD. Watch out here as well! Make certain you know what your lender is quoting you! The lock period is the period of time that a quoted interest rate/discount point combination can be guaranteed. The shorter the lock period, the lower the rates. If you’re quoted a 15 day lock, make sure you can close your loan in 15 days, otherwise if market rates to up, you’ll be subject to a higher rate loan at closing.

JUNK FEES. Pay attention here! Junk fees are all of those small items, such as warehouse fees, document preparation fees and messenger services, flood fees, tax service fees, administration fees, processing fees, underwriting fees, etc., that most lenders add on to their origination fees. Some mortgage lenders mark these fees up to generate extra profit. Make certain you find out what fees you’ll have to pay – and make certain they’re not marked-up!

APPRAISAL AND CREDIT REPORTS. Warning! Make sure these outside services are not marked-up by your lender. Appraisal and credit reports are provided by outside vendors and are usually standard in each market. Other costs are also standard, including insurance and tax impounds; termite inspections; and title, escrow, and recording fees. These expenses are NOT part of the cost of the loan itself and should not figure into your mortgage lender decision.