Did You Know?

BAD NEWS - Some Mortgage lenders are constantly working to create new names for unnecessary junk or garbage fees to impose on innocent borrowers who have no clue when they are being ripped off.

GOOD NEWS - There are many honest mortgage lenders who won't try to impose unexpected last-minute fees.  These are the ONLY lenders we respect enough to work with and are confident enough to refer our clients to.

Mortgage Lender Fees - Junk or Not:

We suggest you start shopping among at least a half-dozen mortgage lenders for a so-called "no cost, no fee" home loan. In today's mortgage market with rising interest rates, we recommend obtaining a fixed-rate mortgage.

However, if you are certain you won't keep your home more than five years, then an adjustable-rate mortgage (ARM) fixed for five years can save you a few interest dollars. But be certain it does not contain a prepayment penalty or negative amortization (where the interest rate adjusts monthly or semi-annually and unpaid interest is added to your loan balance).

Junk or Not - At a Glance:

• If you are dealing with a direct lender, such as Wells Fargo, Bank of America or Countrywide, the lender's good faith estimate must reveal all loan charges. But you might be asked to pay legitimate fees to third parties, such as for the appraisal, credit report and lender's title insurance fee. That's fine. Those are not junk or garbage fees.

• If you are dealing with a middleperson, such as a mortgage broker, his or her written good faith estimate might be less reliable. The reason is the broker often says, "I got you the best mortgage, but the lender imposed these unexpected junk fees at the last minute. Take it or leave it."

• Never pay front money or advance fees for any loan. After listing typical fees some lenders request upfront money. None of these are necessary with a legitimate lender. So don't let yourself be talked into front money or advance fees of any kind.

• Watch out for unnecessary, 100 percent pure lender profit, previously undisclosed junk or garbage fees with creative names such as underwriting fee, document preparation fee, loan review fee, warehousing fee, and loan origination fee.

• Most mortgage lenders are honest. Some are not. The "bad guys" know when they have a vulnerable situation, especially when the home buyer has zero cash available.

If the lender asks you to pay a loan fee of 1 percent or 2 percent of the amount borrowed, usually called points, ask how much reduction you will receive in the loan's interest rate. For each one point loan fee paid, you should receive at least a one-eighth-percent reduction in your loan's interest rate for the life of the mortgage. Pay a loan fee only if you expect to stay in the house at least 10 years. Otherwise, take the no-cost, no-fee mortgage with all lender charges included in the interest rate.
 

When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace including price, financing and terms of competing properties. These are key factors in a successful sale of your property at the best price in the least amount of time.
 

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