Most people know that purchasing a home comes with many expenses. Yet many buyers are shocked when they’re hit with closing costs and third-party fees. In fact, a recent report by ClosingCorp found that more than half of all home buyers are surprised by their closing costs. The truth is, most lenders don’t include full closing costs or third-party lender fees in their initial rate calculations. These surprising costs eventually come into play down the line when you’re ready to close on your new home. And that can mean unexpectedly higher rates for you.
Eave prizes transparency in lending. Purchasing a home is one of the biggest financial decisions of your life, and we believe you deserve to know about otherwise “hidden” costs and fees before going into the process. That’s why we estimate closing costs and third-party lender fees upfront. We can’t predict exactly what these fees be until you’ve chosen a property (more on that below), but we try to provide as much information as possible at the outset. Our goal is to arm you with knowledge so you can choose a home — and a lender! — with confidence.
Here’s what you need to know about third-party closing fees and how Eave handles them:
What are Third-Party Fees?
Closing costs are one-time fees related to your home purchase paid at closing. Typically, they add up to between 2 to 5 percent of the full loan amount. There are two main types of closing costs:
- Lender and broker fees: Lender and broker fees are charged by the majority of mortgage lenders. They include credit report fees, application fees, loan origination fees, and broker fees. Ultimately, these fees are optional and vary from lender to lender. As a rule, when added up, lender and broker fees shouldn’t exceed 3 percent of the total loan amount. At Eave, we charge zero lender fees, saving you money on your home purchase.
- Third-party fees: The second group of closing costs are third-party fees. These are charged on all loans, regardless of which lender you work with. They include unavoidable costs like property taxes, title transfer fees, and homeowner’s insurance. Most lenders fail to estimate third-party fees in their loan estimates and pre-qualification calculators because disclosing them isn’t required by law. Unfortunately, that leaves many borrowers surprised by these fees, not to mention confused when they see a lender who actually includes them in an estimate (like Eave).
Closing costs and third-party fees vary widely depending on your location, the lender you choose and the cost of the home, among other factors. That’s why it’s best to do your homework early in the process and work with a transparent lender, so you aren’t surprised by these costs at the last minute.
Why Eave Estimates Third-Party Fees Upfront
Most lenders refuse to estimate closing costs until they’ve processed your application and provided you with a loan estimate (which they’re required to do by law). They know that once you’ve gone through the process of filling out a mortgage application, you’re more likely to go along with these costs rather than start the process over with a new lender. Anyone who’s ever filled out a mortgage application knows it’s not something you’d want to do 50 times just to compare the true rates of lenders.
At Eave, we believe you deserve more transparency, plain and simple. Purchasing a home is stressful enough without having to worry about being hit with extra fees at every turn. You deserve to have an idea of what your mortgage will really cost before going through a lengthy application process. And you should be given every important piece of information along the way.
That’s why we estimate closing costs and third-party fees for you upfront, before you even apply for a mortgage. We’ll show these costs to you even during initial rate calculations. Ultimately, the closing costs and fees charged on your home loan will depend on your specific circumstances. Once you’ve selected a property and applied for a loan, we can give you much more accurate information.
A Closer Look at Third-Party Fees
Closing costs and third-party fees vary depending on your specific circumstances. The following are some common closing costs you can expect to look out for, and a little more information about whether Eave charges them: