topic Re: Does creditor charge a fee before starting a mortgage application? in Mortgage Loans

Does lender charge a fee before starting a mortgage application?

haoniukun — Thu, 15 Nov 2012 07:21:53 GMT

Hi,

I asked for information about mortgage application from a local credit union.

They told me that they would charge $500 in advance to start the application.

The $500 would be given back to me as part of the closing fee in the end.

They didn't say that the fee was refundable.

I wonder if any other creditors do the same.

If not, can I negotiate to avoid the fee in advance and pay the closing fee?

Thanks

Re: Does creditor charge a fee before starting a mortgage application?

seigex — Thu, 15 Nov 2012 01:04:14 GMT

haoniukun wrote:
Hi,
I asked for information about mortgage application from a local credit union.
They told me that they would charge $500 in advance to start the application.
The $500 would be given back to me as part of the closing fee in the end.
They didn't say that the fee was refundable.
I wonder if any other creditors do the same.
If not, can I negotiate to avoid the fee in advance and pay the closing fee?

Thanks

sounds to me like earnest money.. I put up 1% ($1650) when I applied as earnest money...

Re: Does creditor charge a fee before starting a mortgage application?

Sunshine85 — Thu, 15 Nov 2012 01:08:52 GMT

seigex wrote:
haoniukun wrote:
Hi,
I asked for information about mortgage application from a local credit union.
They told me that they would charge $500 in advance to start the application.
The $500 would be given back to me as part of the closing fee in the end.
They didn't say that the fee was refundable.
I wonder if any other creditors do the same.
If not, can I negotiate to avoid the fee in advance and pay the closing fee?

Thanks
sounds to me like earnest money.. I put up 1% ($1650) when I applied as earnest money...

I don't think that's earnest money- if it was, the poster would be paying the money to the title agent or Realtor to hold in escrow.

$500 upfront does sound a little strange. Is there a chance that the fee is for the appraisal? If so, it's common for the lender to charge that upfront.

Re: Does creditor charge a fee before starting a mortgage application?

haoniukun — Thu, 15 Nov 2012 01:34:50 GMT

I don't think the person from the credit union used such an term.

seigex wrote:
haoniukun wrote:
Hi,
I asked for information about mortgage application from a local credit union.
They told me that they would charge $500 in advance to start the application.
The $500 would be given back to me as part of the closing fee in the end.
They didn't say that the fee was refundable.
I wonder if any other creditors do the same.
If not, can I negotiate to avoid the fee in advance and pay the closing fee?

Thanks
sounds to me like earnest money.. I put up 1% ($1650) when I applied as earnest money...

Re: Does creditor charge a fee before starting a mortgage application?

namvet — Thu, 15 Nov 2012 01:36:04 GMT

Make sure you get a good faith estimate before you pay any money to the lender. The $500 charge sounds like a fee for the appraisal and credit report/processing fee. Some lenders charge that fee at application. Shop around and you will find many lenders/brokers that don't charge upfront fees. Ask for a good faith estimate of closing costs. This estimate will give you a breakdown of all the estimated costs involved.

Re: Does creditor charge a fee before starting a mortgage application?

haoniukun — Thu, 15 Nov 2012 01:36:53 GMT

Sunshine85 wrote:
seigex wrote:
haoniukun wrote:
Hi,
I asked for information about mortgage application from a local credit union.
They told me that they would charge $500 in advance to start the application.
The $500 would be given back to me as part of the closing fee in the end.
They didn't say that the fee was refundable.
I wonder if any other creditors do the same.
If not, can I negotiate to avoid the fee in advance and pay the closing fee?

Thanks
sounds to me like earnest money.. I put up 1% ($1650) when I applied as earnest money...
I don't think that's earnest money- if it was, the poster would be paying the money to the title agent or Realtor to hold in escrow.

$500 upfront does sound a little strange. Is there a chance that the fee is for the appraisal? If so, it's common for the lender to charge that upfront.

I'm not sure. The banker introduced the mortgage to me showed me a list of fee included in the closing fee. The appraisal was part of it. And the $500 is part of the closing fee. But the banker didn't specifically saying that the $500 was part of the appraisal fee.

Re: Does creditor charge a fee before starting a mortgage application?

Sunshine85 — Thu, 15 Nov 2012 01:40:54 GMT

namvet wrote:
Make sure you get a good faith estimate before you pay any money to the lender. The $500 charge sounds like a fee for the appraisal and credit report/processing fee. Some lenders charge that fee at application. Shop around and you will find many lenders/brokers that don't charge upfront fees. Ask for a good faith estimate of closing costs. This estimate will give you a breakdown of all the estimated costs involved.

Get a GFE so that you know exactly what this fee is for. If the lender isn't willing to provide a GFE prior to you paying $500, I'd suggest you move on, and find another lender.

Re: Does creditor charge a fee before starting a mortgage application?

mkm77 — Thu, 15 Nov 2012 03:04:11 GMT

This picks up from an earlier thread...Yes, The $500 is usually to protect the lender for appraisal cost and other fees....To not charge those to a borrower up front is almost unheard of now a days. Does anyone here know of any other business that puts themselves on the line like that? My company did up until last year and we were constantly getting burned from customers jumping ship. A few years ago you wern't at the same risk as a lender because appraisals were transferable. Today mostly they are not from lender to lender.

Re: Does creditor charge a fee before starting a mortgage application?

haoniukun — Thu, 15 Nov 2012 07:18:04 GMT

namvet wrote:
Make sure you get a good faith estimate before you pay any money to the lender. The $500 charge sounds like a fee for the appraisal and credit report/processing fee. Some lenders charge that fee at application. Shop around and you will find many lenders/brokers that don't charge upfront fees. Ask for a good faith estimate of closing costs. This estimate will give you a breakdown of all the estimated costs involved.

Thanks for your advice. I like the credit union mainly because I have a good relationship with them and they provide a discount for my company. I'll also ask some other lenders for options.

Re: Does creditor charge a fee before starting a mortgage application?

haoniukun — Thu, 15 Nov 2012 07:19:07 GMT

Sunshine85 wrote:
namvet wrote:
Make sure you get a good faith estimate before you pay any money to the lender. The $500 charge sounds like a fee for the appraisal and credit report/processing fee. Some lenders charge that fee at application. Shop around and you will find many lenders/brokers that don't charge upfront fees. Ask for a good faith estimate of closing costs. This estimate will give you a breakdown of all the estimated costs involved.
+1

Get a GFE so that you know exactly what this fee is for. If the lender isn't willing to provide a GFE prior to you paying $500, I'd suggest you move on, and find another lender.

Thanks for your reply. I'll consider this carefully.

Re: Does creditor charge a fee before starting a mortgage application?

haoniukun — Thu, 15 Nov 2012 07:21:00 GMT

mkm77 wrote:
This picks up from an earlier thread...Yes, The $500 is usually to protect the lender for appraisal cost and other fees....To not charge those to a borrower up front is almost unheard of now a days. Does anyone here know of any other business that puts themselves on the line like that? My company did up until last year and we were constantly getting burned from customers jumping ship. A few years ago you wern't at the same risk as a lender because appraisals were transferable. Today mostly they are not from lender to lender.

Thanks for the information. It's easy to understand from the business point of view. I'll search around and see if I can get a better deal.