Know the numbers

Credit Report

Checking your credit is usually inexpensive typically under $50. With your permission, your lender will order a detailed review of your outstanding loans and repayment history from a major credit bureau. This helps the lender determine the types of loans and rates for which you qualify.

Application / Processing Fee

Most lenders charge a small fee usually a few hundred dollars to cover the work involved in evaluating your financial profile. Some lenders may credit this fee back to you at closing, so it’s worth asking in advance.

What is APR?

The APR, or annual percentage rate, represents the total cost of borrowing including interest and fees expressed as a yearly percentage of your loan balance.

For example, a quoted rate of 5.875% might result in an APR of 6%, meaning interest costs about $6,000 per year for every $100,000 borrowed, with principal payments calculated over the loan term (15, 20, or 30 years).

Indexes

For variable-rate loans, interest rates adjust periodically based on an index. Common indexes include the Federal Funds Rate or Treasury Bills. Understanding the index and how adjustments occur is critical in a market like NYC, where property values and lending terms move quickly.

Points

Mortgage lenders may offer lower interest rates in exchange for a one-time, upfront payment called “points,” which typically range from 0.25% to 2% of the loan balance. Points are often tax-deductible check with your tax advisor for specifics.

Appraisal Cost

Lenders hire licensed, often independent, appraisers to assess your property’s value, size, and condition relative to recent neighborhood sales. This ensures the purchase price is appropriate and helps lenders feel confident about repayment if the property must be resold. In NYC, appraisal costs vary depending on property type co-op, condo, townhouse, or multi-family building and the neighborhood.

Miscellaneous Fees

Loan processing can include additional charges such as:

• Notary fees
• Courier costs
• County or city recording fees

These can add several hundred dollars to your closing costs, so it’s important to budget accordingly.

Prepayment Penalties

Some loans carry penalties if you refinance or sell within a specified period. Terms vary widely, so confirm upfront with your lender to avoid unexpected costs.