Great deals on Valley homes, but watch out for hidden feesPosted: Updated:
PHOENIX - The Valley housing market is hot again? At least in one price range houses are flying off the market in a matter of days.
But for those looking to buy, 3 On Your Side says watch out for hidden fees.
"The price range between $100,000-200,000 is red hot," Dean Wegner said. "I've got so many people looking to buy those homes they can get a contract the first day it's on the market."
It's welcome news, but with it comes a warning.
As homeowners rush to lock in rock-bottom rates, the cost of doing business for lenders goes up. As a result, borrowers may encounter higher administrative fees along with bigger charges.
3 On your side consulted a mortgage expert to find out what fees to watch out for, first processing fees.
"Most common fee of them all typically," Wegner said.
Wegner, from WJ Bradley Mortgage Captial said on average this should run you about $500-800.
Beware because these fees are on the rise as lenders try to compensate for the lower rate loans. Be sure to compare several lenders' fees and question anything that seems redundant.
Next be aware that Fannie May and Freddie Mac yet again increased fees for loans they purchase or insure.
"They are losing money so they have to make money somewhere," he said.
To figure out if you'll be hit with these charges, ask your lender or mortgage broker whether your loan will be sold to or insured by Fannie or Freddie. Today that's the case for 56% of all outstanding mortgages.
Third on this list of costly mortgage fees are appraisal fees.
That is because of the home valuation code of conduct, a set of regulations on property appraisals that went into effect May 1.
And finally, private mortgage insurance is required of anyone purchasing or refinancing a home with less than 20% equity and it's getting more expensive for borrowers with lower credit scores.
"If you have large down payment and high fico score, ask them to show you where that comes together on the chart and that's why you are paying that amount," Wegner said.
When shopping for a mortgage, ask lenders to provide you with a good faith estimate, so you can compare costs.
Wegner said you should be able to see the bottom line right there in black and white.
"Typically figure 3-4% sales price, all of your fees, all together," he said. "Other than that, you need to ask for an explanation as to what you are paying for."
Following are the top 5 tips for a great home loan:
1.) Ask around from someone who know who just completed the process if they had a good experience. the last thing you want is to be 2 weeks past your closing date with no approval!
2.) By law you have to get a Good faith estimate and truth in lending with-in 3 days of application, look at 2 to make sure the fees are in line.
3.) Ask to see your fico score, and if they say the rate is higher because of a lower score, ask to see the rate sheet with the price and rate adjustment.
4.) Always ask if you can get a lower rate and fees, 99% of mortgage companies will negotiate!
5.) The lowest rate is conventional 20% down, single family home, primary residence and 740+ fico score. From there rates and fees will start to go up depending on fico score, condo vs. home, down payment and occupancy type such as investor, second home or primary residence!