What might the application fee include besides processing charges?

The application fee often encompasses various costs associated with the loan processing, and it is not uncommon for this fee to include the costs of an appraisal and credit report. When a borrower applies for a loan, lenders typically require an appraisal to assess the property's value and a credit report to evaluate the borrower's creditworthiness. These items are essential to the lending process and can be billed as part of the application fee to ensure that the lender has all necessary information to make a decision on the loan application. Including these costs helps streamline the process and provides borrowers with a clearer understanding of the upfront expenses involved in securing a loan.

In contrast, options such as the ongoing monthly payment amount, the final loan balance, or the commission for real estate agents do not fall under the scope of an application fee. The monthly payment is determined later based on the terms of the loan once approved, while the final loan balance pertains to the total amount owed once the loan is disbursed. The real estate agent's commission is typically handled separately in the context of a real estate transaction and is not part of the loan application process.