Is a Mortgage Application Fee a Finance Charge?
A mortgage application fee starts the home loan process. Homebuyers who require financing for their purchase, undergo a thorough financial background check. Lenders conduct these checks to put the homebuyer in a position to succeed. For Mortgage House, we also ensure our clients acquire the best home loan product too.
Home loan application fees do amount to finance charges. In most cases, lenders charge a percentage of the total anticipated mortgage principal as the establishment fee. For example, Mortgage House might charge an application fee of $300 for a $350,000 home loan. In Australia, the total upfront fees average $700.
Homebuyers must pay the bulk of these fees upfront when they apply. However, strategies to waive and defray them exist too. A first-time homebuyer can apply for a $10,000 grant in the territory of the house to help cover the fees.
Since homebuyers pay the application fee upfront, it counts as a finance charge. In the long run, these fees equate to a nominal cost. Home loan rates double as finance charges. The rates range from 2% to 5%, and the average interest rate in Australia hovers around 3.32%. Essentially, fees outside of the principal amount borrowed count as finance charges.
Keep in mind that the initial and closing mortgage fees cover the administrative work that takes place behind the scenes.
Mortgage Application Fee and Finance Charges Conclusion
Although a mortgage application fee is not a finance charge per se, homebuyers can roll it into their home loan. Mortgage House loan specialists can dive deeper into the nuances of the various charges, fees, and costs. Contact our team today.