 Sam
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 Posted: Tue Aug 16, 2005 2:08 am Post subject: Estimated Fees and its Effect |
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Estimated Fees and its affect on APR?
The total payment in mortgage depends on the principal amount, interest and closing costs or estimated fees.
The estimated fees include fees paid at the time of closing the loan, that is, when the mortgage deal is finalized by the lender and borrower. The estimated fees include:
- Origination fee,
- Discount points,
- Appraisal fee,
- Underwriting fee,
- Processing fee,
- Property taxes and
- Mortgage insurance premium etc.
Like points, estimated fees also vary with the different loan programs.
The total monthly payment varies with the estimated fees since the interest is now calculated on the loan amount along with the estimated fees added to it.
The effective interest rate is known as the Annual Percentage Rate or the APR. The APR thus depends on the estimated fees and helps to select the cost effective loan programs. The estimated fees as well as the APR vary with each loan program offered by a lender.
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