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Beyond Rates: What Borrowers Are Looking for in a Home Loan


When it comes to home loans, interest rates are usually the first thing that people look for. However, there are a number of other factors to consider before locking in on a particular home loan option. What should borrowers be looking for in their mortgages?

Read on to learn which home loan elements to look for when buying a house.


After rates, the fees associated with a mortgage are often the next thing homebuyers generally consider when searching for their loans. Here are a couple examples of home loan fees: 

Origination Fees

An origination fee is money paid to the bank or institution that is providing the mortgage. Financial institutions will often incorporate this fee into the total cost of the loan, which will increase your regular monthly mortgage payment. When searching for a lender for your home loan, be sure to compare the origination fees from one institution to another to ensure you're getting a good deal. Origination fees are quoted as a percentage of the total loan and are generally between 0.5 and 1 percent.

Appraisal Fees

Prior to purchasing your home, an appraisal is needed to determine the market value of the property. This information is then handed over to the government for tax purposes. Lenders generally require borrowers to pay this fee upfront before an appraisal can be done on the house, and the cost can vary by lender. If an institution uses a more expensive property appraiser, it will pass that cost back to you and increase the cost of closing on your home


An escrow account is one that holds money and automatically pays for elements of your home purchase, such as property taxes, insurance and mortgage insurance, when they are due. As part of the home-loan process, you will need to create an escrow account to hold the money for the loan while the borrower and the seller finalize the sale agreement.



Another common offering from mortgage lenders is preapproval. Put simply, preapproval allows the lender to assess your ability to repay a loan prior to the request of the loan. This allows borrowers to verify their ability to secure a loan in a certain price range before they ever take out loans to pay for their homes. While preapproval is a common offering amongst mortgage lenders, it's important to check the terms of preapproval with each of your potential lenders before making a decision.

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Topics: Homeownership

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