Mortgage junk fees

Roberta_z5July 11, 2006

I am getting a first mortgage on a house that I just built and moved in to. It is a no-doc loan and I understand I have to pay a premium for the mortgage.

Just got a list of the closing costs and I am amazed!

I can understand appraisals and title fees but what about:

Tax Service Fee: $65

Underwriting: $350 (this is probably fine but the next?)

Processing: $350

Doc prep: $250

Closing Fee: $350

I'm not listing the ones like the title exam, recording, and flood check fees because they seem legit. Can I do anything about all of these fees or am I stuck? I am paying 3 points origination on top of these. The closing is next week.

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Much of that is red-tape-rip-off, but there's no way around it unless you can skip the mortgage and pay cash.

    Bookmark   July 12, 2006 at 1:53AM
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Chemocurl zn5b/6a Indiana

Have you checked interest rates and closing fees at other financial institutions? Possibly someone else would be more willing to attract your business, especially if you have a wonderful credit score. Don't assume that just because you have been a good custoner to them in the past that they are giving you their best deal.

I'd ask them if that was the absolute best they could do as far as interest rate and expences. I'd also tell them I was looking and checking around and that I might be back in touch.

What is a no-doc loan?

Sue...who always tries to get the best deal in such matters.

    Bookmark   July 12, 2006 at 10:48AM
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No-doc means you don't have to provide the usual documentation for your income (W-2s, alimony statements, etc.). The rate is higher on no-docs because the mortgage provider does not have as much supporting documentation as they usually do to verify your income.

I definitely would talk with another provider or two if you haven't already. When I applied for a new mortgage (new house) with the holder of my current mortgage, I asked right out if there was a "discount for good customers". They didn't cut the interest rate or anything really good like that, but they did lop off a few hundred in fees. It's more than I would have gotten if I didn't ask.

    Bookmark   July 12, 2006 at 10:59AM
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Ditto what the others said. Also, check out your small local banks/credit unions. We had great luck with that....low rate, and our closing fees were less than $700 total. Most of that was the appraisal and title fees. Also, the didn't sell our mortgage, so if we have any issues, we can just call the local bank.

    Bookmark   July 12, 2006 at 5:31PM
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No Documentation. 'Stated income' is another flavor.

"The rate is higher on no-docs because the mortgage provider does not have as much supporting documentation as they usually do to verify your income."

Not always. It depends on the loan to value ratio. I do no-docs on investment properties all the time but typically have at least 40% down.
Even on my personal residence I did a no-doc since I had almost 60% down. No way the bank can loose.

    Bookmark   July 12, 2006 at 9:12PM
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Junk fees indeed!! My original construction loan included $25 fax fees.

Did your lender give you a good faith estimate when you applied for the loan disclosing these charges? If so, you donÂt have much to argue about since you knew what you were getting into. If not, or if they didnÂt not appear on the statement, you could always bluff and tell your lender you will not pay these and are considering delaying closing by going with another lender. Time, unfortunately, might not be on your side and your lender probably knows this.

FYI, when I refinanced a few years ago I got a zero point, zero fee loan and incurred absolutely no fees at all upon closing. Yes, they tried to increase the interest rate to make up, but I was not in a hurry and able to shop for the cheapest loan around.

As much as I hate to get ripped off, in the scheme of things these charges are typically a small percentage of the loan and sometimes itÂs easier to just grin and bear them.

Here is a link that might be useful: Mortgage Advice and Counsel

    Bookmark   July 13, 2006 at 6:04PM
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