Mortgage Consumer Beware: Loan Application Garbage Fees

The following are types of fees that can fly under the uniformed consumers’ mortgage radar:

Mortgage Lender One Mortgage Lender Two

Unlike Note Rate: 7.45 percent 7.45 percent

Loan Fees: 2.45 percent 1.70 percent

APR: 7.58 percent 7.49 percent

In the above comparison of Mortgage Lender One and Mortgage Lender Two, lender number two seems to be the best loan deal. While the APR is slightly higher, the majority of consumers focus on the loan fees when comparing lenders. Alternatively, a magnified view of the loan application fees depict an overall lower fees paid to Lender One. The mortgage appeal of Lender Two demonstrates how low loan fees would incur more business even though the first lender offers the best option.

In regard to the loan application process, lenders are required to identify the garbage fees. The information must be disclosed in the Good Faith Estimate of any the loan closing costs. Not to mention, the fees affect the annual percentage rate (APR). More importantly, within the first three day of a loan application submittal, the borrower must receive the Good Faith Estimate. To acquaint yourself with the various garbage fees, review the following charges.

Tax Service Fee: A fee of an outside service to verify that property taxes are up-to-date. The average starting fee begins at approximately $70.

Notary Fee: Prior to the recording of the mortgage deed of trust, the signature of the borrower(s) is required to be notarized. The average fees range from between $10.00 and $40.00.

Wire Transfer Fee: When mortgage providers wire funds to the escrow company to handle the mortgage loan closing. Fees begin around $25.00, and go upwards from there.

APR: As loan officers and brokers are required to detail the APR along with the rate and fees in advertisements, garbage fees are normally not itemized.

Flood Certificate Fee: Federal Regulations mandate that lenders must have flood insurance if the loan issued to a borrower on a property based in a flood-prone area. The fee varies starting at $40.00 and escalates from that point.