Mortgage Consumer Beware: Loan Application Garbage
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