Other Mortgage Loan Costs

Servicing fees are generally deducted from a mortgage automatically. However, borrowers should be aware that there are several costs to a mortgage loan besides the principal and interest payments due each month. The servicing fee is only one of those fees.

Closing costs are due at the loan's closing, which is when the paperwork is signed and the funds are dispersed. Closing costs often cost 3%-4% of the home's price and can include a payment for property taxes and homeowners' insurance. Other fees are charged for a title search, pulling your credit report, and appraisal.

However, some lenders may pay these fees but embed them within the loan's interest rate or add them to the loan's principal balance, often called a no-cost mortgage. All these factors should be taken into consideration when shopping for a mortgage or loan.