When it comes to the home buying process, “what are title fees” is a question most potential owners have to ask themselves at one point or another. We understand why. Of all the various things that come along with the home buying process, there are one or two (or three, or four, or a thousand) that you are unfamiliar with. Also, that “fees” part is a tad scary, isn’t it? Doesn’t this cost enough on its own? Why do we have to bring more fees into the equation?!?! Does “title” mean that I’ll have to box somebody to actually get myself into the house that I want?!?
Alright, well – first off, no, you do not have to box anybody for a title to get into your home (though we do hear that it’s exceptional exercise). Second – not to worry, future home buyers. Here we come to save the day (with clarity). Title fees are something baked into just about every real estate transaction for a long, long time. There isn’t much way to avoid them – but with a little clarification and understanding, you can know what to expect (and perhaps cut them down a few).
So, when it comes to the “what are title fees” question, here are some things that you must know:
Okay, first off – a definition. That’s always helpful, right?
When you go through the home buying purchase, the home is – well, obviously – the place where you’re going to be spending the biggest chunk of your hard-earned dough (it’s worth it, though). However, that’s not all you’re actually going to pay for. Title fees are a “big tent” term that encompasses all of those other little elements that go along with a home purchase. There may be a lot of them – after all, this is a complicated transaction with many different parties involved. So, what exactly are the most common title fees included in this big tent? Let’s break them down here.
Let’s take a look at some of the most common title fees that are out there. An important note on these: some of them will be universal and included in just about every real estate transaction; some of them may not show up at all. Either way, we try to be thorough here at LemonBrew. That’s what we do!
- First, let’s start with the application fees. If you see a mortgage lender trying to charge you for the “privilege” of receiving your application, try to avoid them. Think of them as applications to college – if you’re sending away that money to apply to a particular college and decide not to go there, they won’t send you that application money back. You’ll be in the same position Bluto from “Animal House” ended up in. There’s no need to pay for an application fee – most of the best mortgage lenders out there won’t try to tack on those extra bucks to what is already a very pricey process. Do your research and avoid any place with an application or a “commitment” fee.
- An “origination fee” goes right to the bank lender, the source of your mortgage. If you’ve ever rented an apartment and paid a “broker’s fee.” This is the money you’ll end up paying for their services – giving you the loan in the first place and all the advice, meetings, and guidance from the first meeting up until the very last signature is accepted. Speaking of broker’s fees – a “mortgage broker fee” will also follow under this very same category. If you’re using a mortgage broker to find the best possible deal out there, this is what you’ll end up paying for the service instead of an “origination fee.”
- Things can get complicated with the discount fee. This is an optional service that might benefit some home buyers to take at the start, but it requires a little bit of explanation. If you pay this “discount fee” at the beginning of the process, your lender will cut your mortgage rate by a set percentage. Again, this is an optional service – not all lenders will offer it, and not all buyers will want to jump at the chance. It’s best suited for those that know they’re going to be in the house for a long, long time; first-time home buyers might not want to pay the extra money. Choose carefully.
- The credit report is what lenders use to prove you’re actually going to, you know, pay them back at a certain point. The better the credit report is, the better your options are when it comes to a mortgage! So, you’ll have to tack on some money for the lenders to go out and purchase your credit report from one of the various credit agencies out there. Side note – it’s always a good idea to get a credit report at the start of the mortgage process, so you have a good idea of your credit standing.
- Postage fees and wire transfer fees aren’t going to add too much to the grand total, but they’re essential nonetheless. You’ll have to pay a little bit of money to make sure that the documents actually get to where they’re supposed to go – that means paying for postage (or, in some cases, couriers). Wire transfer fees come along with the territory if that’s the method you’re going to use to actually pay for the transfer of funds from one source to another.
- Underwriting and processing fees come along with the lender. These pay for all the nuts-and-bolts, nitty-gritty services that come with the complex world of closing on a property – both the analysis of the credit check and all the paperwork that goes along with the final closing. Boring stuff, but a bit costly, and (most of the time) unavoidable.
Those are, generally, the big fees that come along with the title. There are plenty of others that might sneak in there, too. Some lenders will charge for a survey of the property, notaries or attorneys, tax and title research, or appraisals. From the natural world, you may also have to pay for flood certification or pest inspection – and depending on the area, the local government may hit you up for a “recording fee” for tax purposes. Be sure you know exactly what you’re going to pay for before you decide on your lender – and feel free to try to negotiate for some of the fees that aren’t strictly “required.”
The title search and review process can be a long and winding one; if you need some guidance, LemonBrew is here to help! Check out our dedicated title division at www.LemonBrewAbstract.com – the place to go for innovative title and escrow solutions.
Oh – and if you’re seeking out more information on everything else real estate? At LemonBrew, we’re here to simplify the home buying and selling process. Check out our LemonBrew blog, with articles like “How to Save Money for a Down Payment” or “The 10 Most Common Problems Found in a Property Title Search.”
If you’d like an added edge for your house buying search, learn how to match with a trained and experienced LemonBrew Partner Agent. With LemonBrew, you have everything you need to find your next home – and your house after that.