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What costs will I have to pay as part of taking out a mortgage loan?

First, your loan will include charges paid to your lender or broker for providing the loan. These charges may come in the form of points and fees. You may have an option to pay a higher interest rate on the loan rather than paying points and fees upfront. If a fee is charged for the lender and broker providing the loan, that fee may include amounts for taking the application, processing and underwriting the loan, and the loan commitment. You may also be charged for locking your rate.

Often, borrowers have an opportunity to pay discount points at closing to reduce their interest rate.  Other times, borrowers agree to pay a higher interest rate to reduce their costs at closing. Before paying discount points for a lower interest rate or agreeing to a higher one, you should consider talking to a trusted financial advisor other than your lender, such as a HUD-approved housing counselor.

Finally, you will pay for the cost of items required by your lender in order to make the loan. Examples of these are real estate appraisals, closing fees for an attorney or settlement agent, title insurance, and government recording fees and transfer taxes.

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