Mortgage Costs

The cost for a loan can differ widely. There is no fixed price for mortgage loans, and getting cost and pricing information is not easy. You should review the costs proposed by the lender and decide if the price is good. You need to find out every fees and interest that make up the price before you apply for a loan, and make sure they don’t change.

There are two sets of payments you have to make when you get a mortgage.

Closing Costs: One-time fees you have to pay at closing the loan. Also called settlement costs, these fees cover every expense associated with your home loan including inspections, title insurance, taxes and other charges.
Monthly Payments: Recurring payments that you will be making every month for the life of the loan. Monthly payments are basically comprised of principal and interest. In addition, your monthly payments will include property taxes and insurance premiums if escrow is used.

Because mortgage costs include closing costs as well as interest on the loan amount, comparing only interest rates won’t be enough in choosing the best-priced loan. Most mortgage experts recommend comparing APRs (Annual Percentage Rates) rather than just interest rates. The APR puts the interest rate, points and some of the other fees into one combined number, so you can compare loans from different lenders more easily. The higher the APR, the more costly the loan should be.