If you've recently applied for a mortgage then you might've noticed the rates and fees came out higher than advertised. If this is the case then it could be due to several different factors that you may not be aware of, and which can increase the overall cost of the mortgage.
An article in aol.com points out that it's worth not being taken in by lower-priced mortgage offers if you are affected by certain key cost drivers. Not surprisingly one of these is credit scores, as most lenders have a threshold of 740 or more. If any of your credit scores are even slightly below this figure you could end up paying more for your mortgage, either in associated costs or through having a higher interest rate. Some people might think they can circumnavigate this score through opening up new lines of credit or paying off old debts. This may or may not help depending on your credit history.
Another huge factor is the amount of equity you have, particularly if you are applying for a conventional mortgage loan which isn't insured by the Federal Housing Administration, the US Department of Veterans Affairs, or the US Department of Agriculture. The best conventional loans can become pretty expensive if you have less than 25% equity, particularly when combined with a low credit score of less than 700.
It also depends on whether you are financing your main residence, or are purchasing an investment property. If you are purchasing any other property other than your main home then you can expect to pay more regardless of equity and credit scores. Another factor is the size of the loan, as larger loans can be more competitively priced. Apparently large mortgage companies prefer bigger mortgages, typically $170,000 or more compared to smaller loans as the interest collected on these smaller monthly payments is below their margins.
There are ways you can help reduce your mortgage rates and fees, and these include having a credit score of 740 or higher for the middle FICO score as this is considered ideal. The loan-to-value should be 70% or less, and owner occupied or second homes that can be classified as a vacation home tend to attract the best mortgage deals. It also pays to close a deal within a month, and to be proactive about providing the lender with any necessary documents so the mortgage can be processed quickly to keep rates and fees low.