Can You Spot the Bad Fees?

This is part of an actual mortgage estimate worksheet created by a company that advertises, “We are a leading independent mortgage lender.”

Let’s look at it, then I’ll point out the issues I see. This is for a $450,000 30-year fixed mortgage.

Origination Fee: Wow, that is ridiculously high. The national banks and wholesale lenders charge $999 to $1,300. That alone is a stopper for me.

Underwriting: $995. That is the normal origination Fee.

Settlement: That is the third party fee that goes to the settlement agent, either the attorney or escrow agent. It is paid 50/50 by Buyer and Seller. The Buyer’s fee is missing. (No, the Seller is not paying both sides.)

Lenders Title Insurance: Round number that’s unrealistically low.

Investor Review Fee: A non-standard, odd extra fee that neither banks nor mortgage brokers charge.

Funding Fee: Funding is part of the lender’s origination/underwriting work. Added non-standard junk fee to pad profits.

Pre-close Credit Report: The Borrower already paid $37 for the credit report. They should not be charged a second time for a second credit look. That is part of the underwriting process. Very odd to see a lender slip in another fee for this task.

Conclusion: This loan is too expensive, contains bogus junk fees, and is sloppy without a specific title fee quoted from an actual title company. I recommend finding a better lender.

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