There are many aspects you should evaluate when taking a mortgage. One of the easily overlooked features of mortgages is their closing costs. These should be typically paid by either the borrower, or both the lender and borrower.
Finance expert Altius Mortgage Group suggests you can also opt to have your lender pay the entire closing costs. This, however, typically means an increment in the mortgage rate offered by lenders in Utah.
Here are some mistakes that might increase your mortgage closing costs.
Overpaying Your Discount Points
A mortgage’s discount points enable the homebuyer to benefit from low rates. You work out these points as a fraction of the overall loan size so that one point is equivalent to 1% of your mortgage. Know the exact number of points you should get for your mortgage to avoid overpaying these discount points.
Overpaying will not necessarily decrease your interest rates by the same margin.
Getting an Unrealistic Rate Lock Period
An excellent way to reduce your mortgage closing costs is to lock your rates for a set period. Rate locks range from 15-60 days with extensions of up to 30 days. Increments on the rate lock period, however, attract additional fees at closing or higher interest rates.
Ensure you select an adequate and realistic rate lock period from the start instead of extending your period later.
Selecting the Wrong Type of Mortgage
Different types of home loans come with their own closing costs. VA loans, for instance, attract a 2% funding fee paid at closing. FHA loans, on the other hand, require you to pay 1.75% of your mortgage size at closing. When choosing your mortgage type, therefore, factor in its closing costs.
Financial safeguards and loan regulations have increased mortgage costs significantly. Lenders include these in closing costs. By avoiding the above mistakes, however, you can limit the amount you pay in these fees and save a significant sum of money.