Question:

Can I avoid mortgage referral fees and does it pay the effort to avoid them?

Answer:

You as a consumer will be paying mortgage referral fees all along the way if you don't care to check if you could reduce or drop some inflated mortgage settlement costs. A mortgage referral fee is paid to a lender or broker directing business to other mortgage loan related businesses.

Lenders and brokers usually collect referral fees from mortgage insurance and title companies.

Usually, mortgage lenders and brokers usually work in close partnership with a title or mortgage insurance company, or other 3rd party mortgage service providers. Borrowers are usually informed that they could select another, say, mortgage insurance vendor but few will actually take the time to do this.

Sometimes, your lender and broker will collect those mortgage referral fees from mortgage insurers, for example, but those will still offer the best price/quality ratio to consumers. Sometimes a lender would make referrals to their own title company, in which case consumers may still be charged excessive referral fees.

Actually, you don't know if you will be getting the best price or are being over-charged if you take your lender's offer. You might have to shop on your own and still find that your lender's preferred insurer has unbeatable prices.

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