From: Initial Fees in a Dictionary of Finance and Banking ยป The concept of upfront fees is also common among investors who wish to participate in a mutual fund. Here, the mutual fund determines the amount of the fees based on the tasks required to organize the investor`s purchase in the fund. As the name suggests, the investor will offer the amount of the fee to the mutual fund at the beginning of the relationship, rather than having the option to pay the fee at a later date. Initial fee assessment is common in the mortgage industry. This applies both in situations where there is direct interaction between the lender and the applicant and in scenarios where a mortgage broker acts as an intermediary. In the first agreement, the lender usually aggregates certain fees directly into the principal amount of the loan so that the borrower can repay them over time. Other fees, often related to services provided by the lender on behalf of the borrower, are payable from the outset and must be paid in full for the mortgage agreement to continue. For a broker involved in the mortgage agreement, the initial fee may include the fees charged by the broker and payable by the borrower. Typically, these are fees that help offset the expenses incurred by the broker when trying to help potential buyers find lenders willing to work with them. Fees are usually broken down, but presented as a one-time upfront fee that the borrower pays directly to the broker. Initial fees are any type of fee that must be paid at the beginning of a business transaction, rather than allowing those fees to be assessed and payable at a later date. Fees of this type are common in a number of environments, including service contracts, business relationships with independent contractors, the purchase of mutual funds, and even entering into a mortgage agreement between a lender and a borrower. The range of fees to be paid on the front-end varies depending on the type of fee, industry standards and, in some cases, even the laws and regulations that govern certain types of transactions.
There are other settings in which a front-end fee may be charged. Independent contractors sometimes charge this type of fee before they start performing tasks on behalf of a client, usually when there is some sort of pre-preparation or research that needs to be done to perform those tasks. Under the terms of the contractual agreement, the fees may not be refundable, which means that even if the customer decides to separate the relationship, the contractor will not have to reimburse the initial costs. . 2 Any payment made at the beginning of a financial agreement. After many years in the teleconferencing industry, Michael decided to embrace his passion for anecdotes, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm`s other interests include record-breaking, minor league baseball, and biking. .