If you’re considering taking out an FHA mortgage loan to purchase or refinance your home, there are several things you need to know about the fees accompanying your FHA loan. The Federal Housing Administration makes it easy for many homeowners to buy or refinance homes that might not otherwise qualify; however, these home loans come with a price.
This article on BankRate.com warns of the cost of Private Mortgage Insurance required on every FHA mortgage loan:
FHA mortgages allow down payments as low as 3.5 percent and have less stringent underwriting guidelines than conventional loans because they are insured by the Federal Housing Administration. But they come at a price that sometimes can be significantly higher than what you would get with a conventional loan.
One of the great things about VA home loans is that they do not require Private Mortgage Insurance, which drives up your monthly payment and does absolutely nothing for you, the homeowner. There are other fees to consider with any home loan to avoid overpaying the broker and lender.
You’ll want to carefully check your HUD-1 settlement statement and question any fees you find there. There are a number of junk fees like mortgage rate lock fees, application fees, loan processing fees, and courier fees that serve no purpose other than boosting profits for the lender and your broker that you must avoid, especially when refinancing.
Any unnecessary fees that you pay on your mortgage refi lengthens the amount of time it will take to break even recouping your expenses, minimizing the benefit you’re gaining from your new home loan. You can learn more about avoiding unnecessary fees and markup when shopping for the best refinance rates by checking out my free Underground Mortgage Videos.