Mortgage Fees for Doctors: How Much Will You Pay in 2025?

Mortgage fees usually cost 2% to 6% of the home sale price. These fees fall under closing costs and are part of the home-buying process.

Most people save for a down payment or ensure they can pay the monthly mortgage payment.

However, if you’re unaware of mortgage closing costs, it can become a burden as it adds to the overall cost of ownership.

Before investing in real estate as a doctor, learn more about the mortgage closing costs to get an idea of how much money you actually need to spend.

How Much Will You Pay In Mortgage Closing Costs?

The average closing costs range from 2% to 6% of the sale price.

As of October 2024, the median sale price for all home types is $434,568. This means you might pay closing costs worth between $8,691.36 to $26,074.08.

However, mortgage closing costs can vary per lender and location.

How to Calculate Your Mortgage Closing Costs

You won’t know your actual mortgage fees until the day of closing. However, you can try calculating them to estimate how much you’ll pay.

Use a closing costs calculator, like the one from SmartAsset, to see your total expenses and what they include.

This online calculator will ask for your location, home price, and down payment to compute your closing costs. It will then show your one-time closing costs and fees, escrow and prepaid expenses, as well as total expenses.

You can also ask your real estate agent to compute your average closing costs and give a breakdown of the inclusions.

Mortgage Fee Inclusions

To understand what goes into mortgage fees, here are common inclusions you should know.

Loan Origination Fee

Loan origination fees are upfront costs paid to lenders to process your mortgage loan.

The service includes reviewing and verifying your application and performing administrative tasks to complete the process.

The fee ranges from 0.5% to 1% of the loan amount and may already include other fees like the underwriting fee.

Note that this fee, along with your loan terms and interest rate, can impact your mortgage loan offers.

Loan Application Fee

The application fee may already be included in your loan origination fee.

However, some lenders can charge this separately if you need private mortgage insurance (PMI).

You’ll need a PMI if you’re paying a down payment of less than 20%. This fee usually costs up to $500.

Appraisal Fee

Mortgage lenders usually require buyers to conduct a home appraisal before approving a loan.

During an appraisal, a licensed professional assesses the property’s value based on its condition, size, number of rooms, market trends, and more. The appraisal fee may range from $350 to $600.

Credit Report Fee

Lenders charge credit report fees to review your credit history from at least two credit bureaus.

This process will determine your eligibility for a mortgage loan and the appropriate interest rate. This one-time fee usually costs less than $30.

Flood Certification

If the property is on or near a flood-prone area, some banks and lenders require buyers to get flood certification for the real estate property.

The certification will let all parties know if the property is prone to flooding and can help you make informed decisions about flood insurance.

You can get a Federal Emergency Management Agency certification for $15 to $20.

Title Services and Insurance Fee

Part of your closing costs include getting title insurance.

Most lenders require buyers to get insurance to protect the buyer and lender against potential disputes about transferring the title.

A title insurance costs 0.5% to 1% of the home purchase price.

Home Inspection Fee

A home inspection fee covers an inspector assessing the condition of a property, from its plumbing to the exterior.

The inspector will then give a report detailing any concerns, risks, or repairs required on the property.

A home inspection can cost around $200 to $500, depending on the property’s size, condition, and location.

Government Recording Fee

The government will charge a recording fee under your closing costs to publicly record the real estate transaction and maintain this record.

The fee depends on the county or municipal office, but it usually ranges from $20 to $250.

Transfer Tax

Some local governments charge real estate transfer taxes to change the ownership of a newly sold property legally.

The fee varies per location and price of the property sold.

For example, the real property transfer tax rate in New York is 1% of the price for residential properties valued at $500,000 or less and 1.425% for homes valued over $500,000.

Discount Points

Discount points are an optional expense that borrowers pay mortgage lenders.

hey lower your interest rate and monthly payment by prepaying a percentage of your total mortgage amount.

Generally, the interest rate is reduced by 0.25% per discount point.

Initial Escrow Payment

An initial escrow payment includes escrow homeowners insurance and escrow property taxes.

Lenders may require you to put money in an escrow account to cover homeowners insurance if you can’t continue paying in the future.

This is a common requirement for buyers with a down payment of less than 20%.

Also, lenders require an escrow property tax in case the buyer misses tax payments.

Document Preparation Fee

The closing costs for the mortgage include the fee to prepare all the documents to be signed and organized, such as the deed of trust, promissory note, and other disclosure forms.

This fee can cost up to $100 and is disclosed during the loan application.

Attorney Closing and Settlement Fee

Some lenders may charge attorney fees to review your paperwork and ensure all contracts are legal.

The fee may be an hourly rate ranging from $150 to $500 per hour or a flat rate ranging from $750 to $1,500.

How to Save on Mortgage Fees

Most mortgage fees are fixed, but you can negotiate some to help you save money. Here are some tips and strategies you can try to lower your closing costs.

Compare Loan Offers

Look for different lenders and compare each vendor’s mortgage fee, closing cost, and loan estimate.

Get quotes from title insurance agents, inspectors, appraisers, and other professionals for more options.

There are also loans tailored for physicians, which makes it easier to buy a home loan during residency or fellowship.

You can present your comparisons to each vendor to negotiate the price.

Find Lenders with Discounts

Check if some lenders offer discounts or don’t charge certain fees, like a loan origination fee. If you’re getting a bank mortgage, try to ask if they offer a discount or fee waiver for clients.

Review the Loan Estimate

When applying for a mortgage, check the loan estimate the lender will give you.

The loan estimate lists the costs and payments included in the loan. Ask your lender or mortgage broker if you can eliminate or reduce some fees to lower your closing costs.

Negotiate Certain Fees

Some fees you can negotiate include the real estate agent and broker fees, discount points, lawyer services, and loan origination fees, among others.

Ask the Seller to Cover Closing Costs

Buyers commonly ask sellers to pay for some or all of the closing costs by taking the expenses from the purchase price.

As a result, it lowers upfront expenses and the seller’s profit. Note that not all lenders, loan programs, and sellers will agree to this.

Apply for a Down Payment Assistance

If you can’t save enough for a down payment, applying for a down payment assistance program can help you cover down payment and closing costs.

These are usually reserved for first-time homebuyers or buyers with lower to moderate incomes.

Buy Discount Points

If you’re refinancing, the lender can roll the discount points and other closing costs into your new loan balance, reducing costs during the closing date.

Consider Getting a No-Closing-Cost Loan

If you can’t pay the closing costs upfront, some lenders offer a ‘No-Cost’ or ‘No-Closing-Cost’ loan so you don’t have to pay for it during closing.

In return, lenders will either charge you a higher interest rate or add the closing costs to your loan amount.

A higher interest means you pay more over time, while a higher loan amount increases your payments and lowers your equity.

Frequently Asked Questions

Plan Your Next Steps With Physicians Thrive

Buying a home or property can be a heavy responsibility and risk without proper financial planning.

When you’re ready to make bold financial decisions, consider working with a Financial Advisor to help and guide you in your next steps.

Physicians Thrive offers services tailored for doctors and medical professionals, helping you manage your finances, start your practice, invest wisely, grow your wealth, and prepare for retirement.

Talk to a financial advisor today to learn how Physicians Thrive can help you!