Junk Fees
by Craig Goebbel
President & CEO, LoanTek, Inc.

Junk fees. You may have heard the term. What are they? That depends on whom you are talking with. However, most will agree that certain fees with official sounding names are pure junk as far as the borrower’s benefit is concerned. Are the exclusive purveyors of junk fees mortgage brokers? No way, I have seen junk fees charged by the biggest lenders in our area. You may think, “what’s the big deal, an extra fee or two won’t hurt.” It is a big deal. Unnecessary junk fees can add hundreds of unnecessary dollars to your closing costs.

Here are some of the charges you should question when you get a Good Faith Estimate: Underwriting Fee; Processing Fee; Appraisal Review Fee; Funding Fee; Shipping Fee. If you see these fees and you are being charged a loan fee you really need to scrutinize your total closing costs and the interest rate you are getting.

Read on to learn why.

It never ceases to amaze me the “creative thinking” used to market mortgage loans. It is hard enough for most of us to get our arms around all of the valid, but very technical financial terms associated with a mortgage loan. When some lenders use slick slogans and other gimmicks it only makes your job as a borrower harder. The bottom line is this; if you are paying a loan fee you should not have any junk fees. Also remember the popular option called “no closing costs” will always have a higher rate than a loan with the same term and normal closing costs.

How do you make certain you are getting a good deal? Shop! Then shop some more if you have to. Your learning curve may be steep at first but I guarantee if you get written Good Faith Estimates from at least three lenders you will quickly sift through the junk and get yourself a fair deal.

Hidden Junk Fees

If you are about to close on a refinance pay special attention to the payoff statement for your existing loan. Beyond a reasonable reconveyance and recording fee some lenders are charging extra fees under the name of “fax fee”, “payoff statement fee” and “processing fee”. One lender even has a charge simply called “fee”. It is important to remember your new lender has no control over your loan payoff and your escrow agent has to follow their instructions so any issue you have must be taken directly to your lender. I believe these extra fees are excessive and take advantage of borrowers at the very end of their transaction when they just want to be done. So far, a very large local bank with national reach wins the prize. Their payoff fees often total over $100. That does not sound very family friendly to me.

© 2004 LoanTek

Craig Goebbel is President and CEO of LoanTek.com, mortgage loan brokerage.  He is also producer and host of Real Estate Radio Show, a Seattle-based talk show featuring mortgage and real estate news, interviews and listener calls. It is broadcast on KVI Radio AM 570 in Seattle, Washington. Past show are also webcast via the Internet at http://www.realestateradio.net.

Real Estate Radio Sponsor

Real Estate Radio with Goebbel and Gray is the leading real estate radio talk show in the world and is hosted by Real Estate home mortgage expert Craig Goebbel, owner of LoanTek Home Loans and Robb Gray of John L. Scott Real Estate.