"Junk Fees"

The Washington Post had a good, though short, Q&A on “Junk Fees” from mortgage lenders. Many people know BoA has a big promotion running right now for their “no fee mortgage plus” which advertises $0 closing fees and $0 application fees, with no PMI. (Update July 2007: See the article about whether BoA’s program really saves you money here.)

But what are these fees? And which ones are negotiable? Here are some excerpts from the WP, and you can read the full entry here.

The first category of charges listed are those items payable in connection with your loan. These may include an origination fee, points, appraisal fee, credit-report fee, mortgage-broker fee, underwriting fee, processing fee, courier fee and wire transfer fee. An origination fee and points are typically a set fee that you have agreed to pay to obtain your loan. It may be a percentage of the loan amount, say 1 percent.

An appraisal fee and a credit-report fee are typically not negotiable, as the lender or your mortgage broker will order these.

The mortgage-broker fee listed on the good-faith-estimate form is negotiable. The lender’s inspection, underwriting and processing fees may be somewhat negotiable, but many lenders stay fairly firm on these fees.

Courier and wire-transfer fees are typically charged for transferring loan documents to the escrow closing company and wiring the loan proceeds to the closing officer. You may ask that these be reduced or waived.


2 thoughts on “"Junk Fees"

  1. While “Junk Fees” seem bad, and it seems like a great deal to get a loan with “No Junk Fees” (or the close relative “no fees”), just keep in mind that the lenders pretty much all make the same amount of money one way or another.

    So don’t get duped into a “no fee” program that has a higher rate.

    I even saw somebody that got a “no fee” loan… but then opted to pay a point to pay down their rate! I thought that was hilarious!

    I’ll say it again… they thought the rate was high (um because there were no fees, so the bank had to increase the rate) so they paid a point (aka, FEES!) to make the rate lower.

    Bottom line is this: make sure you addup all the fees and compare rates from a couple different companies. Oh and avoid those super discount, no accountability internet banks (unless you have a friend that was satisfied)

    Thanks for bringing this up!

  2. Great points! Especially on the internet lenders — I haven’t written about that yet, but will soon!

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