My lender told me that there is an application fee?

Question

He said an application fee of $250 and then we'll need the appraisal fee and of course we'll need an inspection. Does all this sound legit, is there always an application fee?

Answer 1

If they are asking for upfront money, they are trying to hold your money hostage to commit you to the deal. Most of the companies that do that know that 1) Better rates are available to the public and you're likely to find something better if you try, 2) they're going to hit you with a bunch of extra stuff they didn't tell you about at the end.

Never pay for more than a credit report up front. You should choose the appraiser if you're going to pay them - that way you own the appraisal, not them. You should also choose the building inspector if you've got to have one - most refis don't, but only a complete idiot spends that much money to buy a property and *doesn't* pay a few hundred for the inspection first. If the lender orders them, they own them. They have to give you a copy, but you can't take it to another lender to use if this one hoses you.

Now, at closing, you can expect to pay some fees. How much depends upon a lot of factors. I tell people with entry level single family residences to expect about $3500 total in actual loan costs, plus whatever points are paid to buy the rate down, plus the expenses related to the purchase, which vary a lot. By the time you're done with title and escrow and appraisal and lender's fees, that's what it really is. I'd rather tell the truth and guarantee the total, but since most people don't realize how many games prospective lenders can play, quite often the person signs up with the person who talks a good game but won't guarantee the quote. Usually you can choose a higher rate to get some or all of your costs paid (I love doing zero cost loans myself, and they actually are a good thing for most clients), but there is *ALWAYS* a tradeoff between rate of the loan and cost of the loan.

A lot more loan education on this website. You might start with this article on the Good Faith Estimate

http://www.searchlightcrusade.net/posts/1122472894.shtml

Answer 2

With each company there is always going to be different charges. Application process, appraisal fee, underwriting fee, credit check, hazard ins, etc. the list goes on.

But some of those fees can be included into your loan. The bank needs to know the value of your home that you have or are going to purchase.

I am from Washington State, so I do not know if the same rules that apply here are the same for the state that you are in. Find a Mortgage Broker in your area that can better explain the fees and laws of where you live.

You can also look at the rules and guidelines of the company. But always shop around with at least 3-5 different lenders to give yourself a better choice. Contact a Real Estate Agent if you do not have one. Shop around for someone that will work for you and your needs.

Answer 3

That sounds about right. Where I work there's a $75 app fee, and any vendor fees which are appraisal, flood and title work but that's only on euity products. When you're purchasing the house it costs more. Check with the lender to see what other fees you would have to pay and compare them to another lender.

Answer 4

Application fees and any fees upfront are merely attempts to get you tied up in the deal so you don't go elsewhere. Any broker that does this to you should be avoided. However, I have my clients pay for the appraisal because it would affect my bottom line should they leave and go elsewhere, plus they can use that appraisal with any other lender, should they decide to leave.

Regards

Answer 5

There are enough lenders that do not charge application fees. If your lender charges one and is refusing to waive it, search for another lender.

You will need to pay appraisal and inspection fees, as these are people doing a service for you. No way around those two.

Answer 6

YOu shouldn't be paying upfront monies...usually it is all at closing. Appraisal fees, underwiting fees, aka JUNK FEES are very common. . . but dont pay it upfront.

Inspections (pest) are required by all lenders
And the appraiser does do some limited inspecting, like of the roof.

Try another bank if they are asking you to cut a check upfront....you could get ripped off.

Answer 7

My company does not charge an application fee. The only fee we get up front is the appraisal fee everything else is taken care of at closing.
If you would like to see what we have to offer please contact me.
[e-mail]

Answer 8

An upfront application fee is not needed. He's just trying to tie you to the deal.

If you've got a 150k loan amount or more, I can do your loan for $0 bucks... It's nice to be the guy with the license :)

Seriously though, as a mortgage broker, the bank I submit the loan to will pay me. 90% of people out there are blinded by commercials. Remember advertising takes money.

Answer 9

That is on the low end of application fees, and yes, it is legit.

I routinely see application fees in the $595.00 range.

You can negotiate with the lender to pick up some of the costs. Some lenders will, others won't.

Answer 10

call your local real estate board, this sounds fishy to me. the appraisal should be done by an independent appraiser, not one the lender suggests. as is the inspector. at least get the house inspector, he can tell you what is wrong with the house, and what you will need to upgrade in the near future.