Home Loans
What Are Junk Fees In A Mortgage Deal
(presented by www.refinance-refinance.net - mortgage lenders)
By Ben Afzal
Basics
A junk fee or a garbage fee is a fee that is either:
- an unnecessary fee
- a legitimate fee that is too high
Unnecessary Fees
You should not have to pay an application fee. This is a basic fee that you should always avoid.
No mortgage broker or lender that is competent and fair needs to charge a borrower up front just to apply for a loan.
The most you will need to pay is a fee to cover the cost of your credit report. This is an expense a mortgage broker or lender will incur to check your credit.
A credit report usually costs less than $50. The mortgage broker or lender should only charge you what the credit report costs them, and not markup this cost.
Legitimate Fees That Are Too High
There are many fees that you will be charged that a mortgage broker or lender can control because these are items they directly charge you.
You generally shouldn’t pay a processing fee over $1,500. Check to see if this can be lowered.
You also generally shouldn’t pay more than 1-2 “points” up front on your loan. A point is one percent of the loan’s size. If your property is very small in value there may be an exception to this.
You shouldn’t have to pay very much to have your appraisal report evaluated. Although you may need to pay for an appraisal report (usually around $350) you can pay this directly to the appraiser. The mortgage broker or lender should not charge high fees to analyze the appraisal report to see what kind of loans you may be eligible for. This fee is almost always only charged by the lender because they have a staff that reviews the appraisal for accuracy.
You can save money by carefully evaluating competing loan offers.
Make sure your loan offers are comprehensive, and that the offer represents all the costs you will incur. It is easy to get a lowball offer. Just because an expense is not listed on an offer doesn’t mean you will avoid it. The offers are usually only esti!
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