Question

Because home loans are applied for at one point but may not actually close until weeks or months later, the fees for some items may change up or down in the interim. However, some fees have "zero tolerance" for change. Those fees include:

a) Loan origination fees
b) Property taxes
c) Appraisal fees
d) Homeowner's insurance

Answer 1

a) Loan origination fees are zero-tolerance fees and cannot change once the loan estimate is given. Property taxes and homeowner's insurance, typically handled through an escrow account, can vary. It's vital to understand mortgage terms, especially for zero-equity home loans and ARMs, as they can greatly impact overall costs.

Step-by-step explanation:

Some fees associated with home loans have "zero tolerance" for change, meaning they cannot increase or decrease once the loan estimate is provided. Among these fees, loan origination fees are typically set in stone and cannot be altered. On the other hand, items like property taxes and homeowner's insurance may be included in an escrow account, and their amounts could change due to adjustments in tax rates or insurance premiums. Appraisal fees may also fluctuate depending on various factors including the appraiser's valuation of the property.

When considering a mortgage, potential homebuyers may encounter offers such as a zero-equity home loan, which does not require a down payment. However, this may lead to the necessity of purchasing mortgage insurance, which protects the lender in case of default and adds to the overall cost of the loan. Understanding the full terms and potential changes in rates, especially for adjustable-rate mortgages (ARMs), is crucial as they can significantly affect the monthly repayment amount and the overall cost of the loan.