There is no doubt about the benefits associated with hiring a mortgage broker, but you need to understand that not all brokers are going to offer the best deals. Whether you are looking for a home loan or you are interested in a second mortgage in Toronto, keep in mind that you might end up working with someone who is associated with a particular mortgage lender. No matter what your financial circumstances are, those brokers will push you to opt for a specific deal only. Therefore, it is imperative not to fall prey to those unscrupulous lenders and mortgage brokers. You should always ask about the rate they are going to offer and fees they are going to charge.
It is important to understand more about common mortgage fees so that you can make a comparison and select something that is just right for you.
- Appraisal fee: Bank appraisal fee is usually the most common mortgage fee. Mortgage lenders or brokers will ask you to pay a certain amount of money to send a licensed appraiser to the subject property. This helps them get a better assessment of the property. A mortgage broker will also prepare the appraisal report after reviewing the market conditions. The broker or lender usually hires the appraiser to confirm the property is safe and is actually worth the sale price they have agreed upon with the seller.
- Rate lock fee: Rate lock fee is another type of fee mortgage lenders or brokers charge. It is charged for the protection of a mortgage broker or lender and helps when the current interest rates may escalate suddenly and significantly. When interest rates fluctuate significantly, certain loans may not look as attractive as before. This is the situation when a rate lock fee comes into play.
- Application Fee: Depending on how experienced or reputable your mortgage broker is, you may have to pay some money to have your application processed. The fee varies greatly between brokers and lenders – it may also change if you are looking for second mortgage in Toronto. Sometimes, the broker may waive the fee in order to make their loan offers more attractive. In some cases, mortgage brokers ask for an application fee to gain access to a credit report and then process your application. Some brokers might include the cost of the appraisal into the application fee. Therefore, you need to ask your broker exactly what they are going to charge in terms of application fee.
- Origination Fee: When you work with an experienced mortgage broker, you have to pay a certain amount of money as an origination fee. They work with the lender on your behalf, so they ask you to pay some money to compensate their efforts. You usually do not have to worry about the origination fee if you choose to work directly with a lender. However, you do not want to pay more money as interest rate to save some money for origination fee.
In addition to these mortgage fees, you might also have to pay a processing fee and underwriting fee. Not all mortgage lenders are going to charge these fees, but it is better to inquire about the money you have to pay while looking for a second mortgage in Toronto.