Junk Fees: How To Avoid It When You Buy Your House

Surveys on mortgage loan borrowers show that most Americans are paying more than the actual costs of their homes. Additional fees or what are called “junk fees” burden most home owners on their home loans.

If you will not go out of your way and do your research, lenders will not give you any discount. Lenders are good at offering low rates at the start just to get you to sign up but once you’re in, they can impose unreasonable costs on your loan at closing time. Here are some tips to avoid unnecessary mortgage fees:

Compare all fees, not just interest. To avoid paying mortgage junk fees, don’t just compare interest rates of each lender. Instead, compare all the fees involved in the loan, including initiation fee, administrative fees, processing fees, closing fees, etc.

How much exactly? Don’t just accept an offer if you’re being told that you will not have to pay anything except for some “processing fees.” Clear up how much exactly will the “processing fees” cost you. Instead of just verbal reassurances that you will not be paying for anything way out your budget, insist that you be given a documented copy of all costs that you will be paying at the closing. However, make sure that the copy of the final billing costs will be handed to you days before the actual closing date. This will give you enough time to study the costs you will be paying.

Watch for the title insurance policy fee. Some people get charged more than a thousand dollars for a title insurance if they go to a company endorsed by their lender. It would be better if you shop around for insurance companies to make sure you’ll get the best rate. Furthermore, if you can request for a copy of a title insurance policy from your lender, you can get huge savings because it cuts down the work the title company has to do for you.

Ask for receipts. When paying for government charges, always ask your lender for the receipts. Your bill can soar from $25 to more than a hundred for such fees if you don’t demand for receipts. If your lender says that they had to get the services of another company to process these, the more you should demand to see the receipts of these payments.

If you’re planning on applying for a mortgage loan, you should be particularly aware of these tactics. Remember that lenders mean business, and the bigger the payment they can get from the customers, the better it is for their business.

It might take a little more time and effort on your part to shop around for lending companies, inquire fees from each lender, talk to your lender and ask for receipts. However, your efforts will also pay off because you can save hundreds, even thousands of dollars on your payments.

Be wise. Don’t let mortgage lenders get the better out of you. Know your rights as a borrower and be prepared to stand-up for them.