I am refinancing my house, but what do all of these fees mean? Where is my money going?

Question

I am not sure where all these fees are going. What does all this mean? I am refinancing my house and I would like to know who is getting all this money that I am paying for. What’s a mortgage broker fee? And all these other fees?

Loan amt. 221,250 Int rate 6.625
800 Items Payable in connection with loan:
801 Loan Origination fee 2215.5
802 Loan Discount fee 2215.5
803 Appraisal Fee (400)
808 Mortgage Broker fee 400.00
810 Processing Fee 900.00
Administration fee 950.00
Processing fee 495.00
1100 Title Charges
1101 Closing or Escrow Fee: Estimated Escrow 650.00
1105 Document Preparation fee 150.00
1106 Notary Fee 150.00
1108 Title Insurance Estimated Title 850.00
Misc 250.00

1200 Government Recording and Transfer Charges
1201 Recording fees 90.00

Estimated Closing Cost 9409.00

Estimated Prepaid Items/Reserves 1280.00
Est. settlement charges 10,689.00

Answer 1

That's a lot of fees - the bank/mortgage company gets most of that money - that's how they stay in business and pay the brokers you are getting the refinancing thru - have you tried more than one broker to see if anyone else charges less in fees?

Answer 2

You must be looking at the estimated HUD1 closing statement judging by the fact that you have provided line numbers. On this estimated, it should be disclosed who is getting the various fees.

801. Origination Fee should be goint to the mortgage broker. This is a normal fee and at minimum is 1 percent of the loan amount.

802. Loan Discount Fee should be going to the lender that the mortgage broker is dealing with. Did you buy your rate down at the time you locked in? If it is disclosed going to the mortgage broker, I would question that heavily.

803. Appraisal Fee should go to the appraiser who did the value analysis on the property. Sometimes it is disclosed as going to the lender, who in turn pays the appraiser directly. This is a common fee. Since you have it brackets, I assume you paid for this up front which is common with refis.

808. Mortgage Broker Fee in my opinion is another junk fee. Question it!

There should only be one Processing Fee going to the mortgage broker. The Admin Fee should be going to the lender and their processing and underwriting should be covered in this fee.

Also, do you see a Yield Spread Premium? This is money paid to the broker from the lender outside of closing. This is additional money the broker is making on this loan and by law must be disclosed.

All of the title charges are normal fees and must be paid. You could save the notary fee by signing your loans docs at the Title Company's office rather than have a notary come to you. The Misc Fee, question it.

The recording fees are required and depending on what county the property is located, will determine what the cost is. This is a normal charge.

From the time of your loan application, the broker has three days to provide you with a Good Faith Estimate and a Truth in Lending. Where these provided to you on time? Also, the broker should have given you a pamphlet discribing all of these charges. Did the broker provide you with this pamphlet at the time the disclosures were provided? If not, call the broker on the carpet and tell him you will go to your states Attorney General's Office or (if your state has one) the Department of Real Estate. With the industry hurting as it is, this broker will jump through hoops to get this deal closed.

Answer 3

You should sit down with your mortgage broker and go over each fee on this list. This appears to be a good faith estimate. This will get you answers about what and who get them.

Now the good thing about these fees and points are they negotiable, so negotiate away.

This broker is charging you 1 point and getting 1 point from the lender in which he is getting the loan through for you. This is normally ok.

You should concentrate your negotiations on the fees and ask for them all to be reduced and some removed. You can always threaten to take your business else where.

I agree with most of the others that have made comments that it appears that a lot of these fees are attributed to the mortgage broker and perhaps the lender.

The escrow fees and title fees as well as any insurance fees are normal. If you have insurance currently, you may keep the insurance. You might be required to increase the number of months because you might not have enough to cover what the lender want, which is normally six months left.

If you are not comparing loans with another company you will not need a truth in Lending. If you decide to compare mortgages with another mortgage company this is the only way you can judge which is more economical for you.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 4

Bottom line is you are overpaying. Todays rate is roughly 6.625% with NO points and you are paying two points (or $4400 dollar than you should be, just in points - i.e origination fee and discount fee). You are also paying TWO PROCESSING FEES (one is normal, two is just wrong). Also, admin fee is what is called a "junk fee" - it's pure profit to the lender. Any fee in the 1100 range are from the title company and are legit, as well as the 1200 fees which are from the local and / or state government.

Get a free second opinion from Mortgage Zapper - http://www.mortgagezapper.com - you will get a no-fee quote from a bank (not a broker).

To answer the question about what a broker fee is, it i used to be a fee charged by a broker to shop and find you the best deal. For a lot of brokers, it is just pure profit.

Do some more homework and you will see that you can easily save $5,000++ dollars.

Answer 5

Previous responders are correct, you are being charged way too much nd too many junk fees, all of that goes to the lender.

Call your current lender and ask about a "streamline refinance". If you are not taking cash out of the transaction it is the least expensive way to go.

If you are getting cash from the transaction, shop, shop, shop for a good, honest, ethical, experienced loan officer who won't take you to the hoop on fees like this one is trying to do.

Ask the loan officers you speak with for a Truth in Lending Disclosure, not a Good Faith estimate, as the TIL will allow you to compare costs between lenders by comparing the Annual Percentage rate (APR) which compares the costs in the form of an interest rate. The closer the APR is to the quoted interest rate the more cost effective the financing.

Finally, stay away from the trolls on this site. Some of them may well be honest ethical loan officers but you are much better off being able to deal face to face and there are a couple on here who are real scammers.

Answer 6

1% origination is common
appraisal fees are from 350-400

there are two processing fees.....there should be only 1...for 500 or less. Administration should be no more than 500 as well.

tell them to take off the discount points....that's going to save you like 4k with everything.

brokers aren't allowed to charge you YSP..and discount points at the same time.

processing fee should be 500

also depends on what state you're ing

Answer 7

Loan origination fee, mtg fee, processing fee, administration fee, processing fee, doc fee, notary fee and not sure what the goverment fee is for. All of these fees go into the Mtg company and LO pocket