Mortgage Fees and the Need to Shop for a Mortgage Loan

There are so many benefits to getting your home loan from a local community bank. But if you want to save money on your mortgage you will want to shop for your loan. As consumers, we do our research and compare prices, quality, etc. on most purchases we make daily, so why would it be any different for one of the biggest expenses we have as a consumer?

You may have seen in the news lately that there have been changes to mortgage fees starting May 1^st. The Federal Housing Finance Authority (FHFA), which oversees federally backed mortgage companies, Freddie Mac and Fannie Mae, have implemented new credit risk fees that are meant to provide more opportunities for low-income borrowers to qualify for affordable homes. However, this has changed the fee structure and has some consequences for borrowers with higher credit scores.

A credit risk fee (also known as Loan Level Price Adjustments- LLPA), is charged by the mortgage investment company and is a percentage of the loan amount based on criteria of what makes a loan have risk. Things like credit scores, loan to value, property attributes, etc. can cause your LLPA fees to be anywhere from 0.125% to up to 5% of your loan amount!!

These fees are why it is so critical to shop for a loan and to compare the fees and interest rates. There are some fees that will be similar at all banks (i.e., Appraisal, Title Work, etc.), so the fees to compare are bank fees (i.e., Origination Fee, Document Fee, Settlement Fee, etc.) and the LLPA fees.

Iowa State Bank has mortgage products that do not have the LLPA fees which is a huge up-front money saver. We also sell the loans directly to the investor, which helps keep rates low, saving you on interest paid over the life of the loan. While we can buy you a grill, vacuum, or firepit for doing a loan with us, our goal is to get our customers the best rates and fees, saving you a lot more than the cost of a “free” gift.

Lastly, not only do our borrowers get great rates and fees, but we also retain the servicing. That means you will always have a local, friendly employee to help with your mortgage questions or if you want to make additional payments. Please call your local Mortgage Lender to learn more about what Iowa State Bank can offer. They can discuss the product that will fit your needs and give you a free rate and fee quote.

Go to the Home Loans page on our website to find your mortgage lender, apply online, and get a rate and fee quote.