What are mortgage junk fees?


Mortgage junk fees are often disguised by the lender. There are a lot of fees related to a loan, and they are supposed to be disclosed on the Good Faith Estimate. However, the GFE has no binding force and lenders often deviate up in the hundreds and sometimes thousands in final closing costs.

Junk fees are often itemized to persuade the borrower that it is important to compare them when comparison shopping, while in fact the thing that matters to the borrower is to know in total how big these costs are for each lender. Mortgage junk fees are charged upfront, and can include items as express mail delivery, application fee, sign up fee, etc. On top of all, because many borrowers will look at the origination fee when comparing quotes, the quoted origination fee may be very low, and many junk fees won't be quoted until closing when the borrower is almost unable to back off without losing money.

To avoid being charged too much mortgage junk fees, it is wise to ask if the lender will set bottomline lender fees.

Also, have in mind that escrow fees, points and per diem interest, despite charged upfront, are not mortgage junk fees and neither are third-party services.

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