Many consumer watchdogs would argue that “junk fees” are any loan costs paid directly to your mortgage broker or lender. Examples of this would be fees paid to your broker for “processing” your loan application, “preparing” loan documents and “underwriting” or “warehousing” your loan; not to mention the granddaddy of them all- the mysterious “miscellaneous” charge.
Conversely, legitimate charges can be said to be those that are paid to third-parties which are necessary in the processing and closing of your loan, such as escrow and title companies, appraisers, notaries, and county recorders.
No matter what, its best to always inspect and question any fees you don’t understand; especially if they weren’t initially disclosed in the good faith estimate that you received early in the loan process.
It is important to keep a copy of your original Good faith Estimate. Call your lender to review each item at the time of application as well as at the time of closing to make sure your Good faith Estimate and Hud-1 Settlement Sheet have the same fees.
Junk fee's are often labeled with made up names such as loan set up fee, file review fee and names of that nature. the lender does charge a lender fee to review your file so no other review fee should be necessary. Your mortgage broker will charge the normal fees which are origination, processing and mortgage broker fee. Any fees by any other name should raise a red flag and be questioned.
The bottom line is that junk fees can easily add hundreds of unnecessary dollars to your closing costs. Protect yourself by shopping around and asking plenty of questions.
And call us at 888-418-4467 for a comparative Good Faith Estimate if you don’t like the answers your getting.
Sometimes junk fees are included from a third party other than the Broker such as escrow or the notory. Be sure to have your broker work with you and for you to have any third party junk fees removed
You mortgage professional should work with you on what fees are justifiable and to make sure that all fees make sense. Some fees can be waived or lowered to make the loan work.
Junk fees are unjustifiable fees adding to the cost of your loan. The main purpose of these fees are to increase the brokers profit. It is important that you go over your good faith estimate and to question any fees that you feel are unnecessary.
Many times on purchase loan transactions your loan officer is forced to work with a title/escrow agency that they are not familiar with and will have little to no control over the fees that are charged by these title companies. There are many title companies out there that charge "junk fees" to add to their profit margins. If you work with a title company that your mortgage broker is familiar with, many times he is more likely to be able to negotiate the title companies fees, if there is anything that seems excessive. Therefore, it is not just the lender's and/or mortgage broker that you need to watch for "junk fees", it is the third party fees that are involved as well. Call us and we will make sure you receive a fair deal and we can discuss any fees that you are not clear about or do not understand.