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Understanding Those Pesky Loan Application Processing Fees

Very few people are exempt from the fees associated with the loan application process. As any homeowner knows, a substantial portion of the mortgage loan can be found in the loan origination fee. The loan origination fee is the fee charged by mortgage brokers or loan officers. The origination fee is represents the mortgage brokers earnings for assisting a borrower with the loan application process. As there is not a standardized national or local loan origination fee, charges vary and are based upon the rate of interest.

In addition, there are a number of other fees charged by loan officers that are not excessive. However when combine with other loan application processing fees can rack up to more than hundreds of dollars. In certain circles, the charges are known to be "garbage fees." Generally, the fees are excessive and above the typical rates charged for credit reports, appraisals, escrow services, and title administration. As garbage fees vary between mortgage lenders, it is pertinent to have an understanding of the fess because they can be disguised as a medium to increase revenues while supplementing a low origination fee. The more prevalent garbage fees include the following:

Loan Application Processing Fee Mortgage brokers with the aid of their loan processors work in conjunction with borrowers to acquire the mandatory information and documentation by lenders. In the majority of most loan application fees, loan originators will dole out costs in the loan application processing fee to the borrowers.

Loan Underwriting Fee Certain lenders utilize Automated Underwriting Systems (AUS) to evaluate credit risk of mortgage loans. The service is charged by lenders who use secondary market investors (FNMA and FHLMC). Alternatively, other lenders may employ subcontractors to underwrite the loans. As a result, lenders may charge borrowers an underwriting fee to offset the expenditures.

Document Preparation Fee The fees charged for the preparation of both legal and miscellaneous documents required for the closing.