One of the big benefits of working with 1 Stop Lending is we keep our overhead low, which means we don’t have to charge our clients a bunch of junk fees just to stay in business. But what are junk fees? Where can you spot them if you are considering other lenders?
Knowing about these fees can save you a bundle, and can help you when you’re trying to decide which mortgage lender to work with. Believe it or not junk fees aren’t illegal, and many mortgage lenders will spring them on you during closing. Be sure to ask questions about these fees any time you want to do business with any broker or lender.
Processing Fees
Also known as a “loan application fee.” Some application fees are as high as $500! They’re almost always nonrefundable. They don’t add any value to your loan or help you get a better process. They’re just pure profit for the lender.
Administration Fees
Pure junk! Supposedly covers the costs of managing the loan during the closing process. Why go to a mortgage broker at all if they’re not going to m manage the loan during the closing process?
Loan Origination Fees
These fees are also charged up front, and they can be hefty: up to 3% of the loan amount! What are they charged for? Document preparation, which is part of the mortgage lender’s job. We don’t think you should be charged for document preparation.
Note, these fees are in addition to the fees associated with buying down your rate that are referred to as “discount fees” or “points.”
Underwriting Fees
Supposedly covers the cost of evaluating your total loan application package, including your ability to pay back the loan. Sometimes lenders also charge an up-front loan commitment fee.
In our opinion this is yet another junk fee. Evaluating your ability to pay back a loan is part of how we earn our commission, and your business.
Rate Lock Extension Fees
Fees charged to “lock in” your mortgage rate for 30 to 60 days. There are all sorts of shenanigans that happen with these fees. For example, some lenders let lock periods expire if interest rates rise, claiming the borrower couldn’t process the paperwork in time. The deal “falls through” and the buyer now has to wait even longer to get a home.
We work to keep your rates competitive and we also work fast to get your loan approved so that you don’t have to worry about fluctuations in the market. In a lot of rare cases, we do have to extend the rate, and if that happens, we will work to cover this charge for you!
You Shouldn’t Have to Pay Up Front
We are compensated by the lender directly on the mortgage we generate for you. We don’t get paid until the deal is done.
We’re small and family owned, and we treat you like family, too. That means we don’t let a commission sway our judgment. We tell you if a loan doesn’t make sense and work with you to create the loan that meets your needs.
If you’d like an easy, stress-free, low-cost mortgage lending experience, contact 1 Stop Lending today.