"Preferred" Lender Rip Off/Excessive Fees

[MrChairman]

I just got the preferred lender overnight loan package in the mail. In the span of 2 days, our closing cost estimate has went up almost 2k. We are doing a VA loan in conjunction with a Tex Vet Loan. According to the VA if the 1% origination charge is levied, an entire list of fees can no longer be charged. Here is the link to the list:

http://www.vba.va.gov/ro/cleveland/Allowable%20Closing%20Costs.pdf

Currently listed on our GFE/Closing Cost Worksheet are the current non allowable fees:

-App Fee: $275

Processing Fee: 400

Underwriting Fee: 800

Doc Prep: 175

Appraisal Management Software: 10

Doc Prep #2: 125

Tax Service: 70

Doc Prep #3: 150

Settlement Fee: 325

Pest Inspection: 80

Yes, there are 3 different charges for doc prep fees! Closing costs along with prepaids are well over 11K on a 200K home. The builder is "giving" us a 5k credit. Even with this credit we are still out over 6k which is the real cost these closing costs should be. So in essence the closing costs are fluffled and they still get us to pay all the fees. I fired off an e-mail to my LO and told her I would be shopping her closing cost worksheet and I also asked why she is charging us fees that she shouldn't be per the VA. We paid less closing costs on our 260K condo in MD. This why I always say the lender preferred lender is usually a rip off and you end up paying for all those freebies you get someway. If they can;t reduce these costs I will find another lender and forfit the 5k lender closing cost assistance and the 5k in free upgrades.

[mynameainttracy]

We used our builders preferred lender but a different closing company and saved several thousand dollars just on the closing part. I can't say if your costs are high because those are pretty average for where we are. Our closing costs and prepaid were initially $17k and we got them down to $12k just by making that one change. We are also VA with funding fee waived.

[frugalQ]

We used our own lender and the builder's closing attorney.

We negotiated with the builder to keep their 'incentive' if we found a better product with another lender. The builder doesn't have that language in their standard contract....they did an addend for it.

[StartingOver10]

^^^This. Shop your lender. You won't know until you compare lender fees. Third party fees like title co's also vary from vendor to vendor.

Note:  Most changes to a contract are done by an addendum (or mulitple addenda). That is normal and customary in the real estate business. We don't have much of the cross out and initial type changes anymore.

[MrChairman]

Unfortunately in Fort Worth everything is selling as fast as they can build it so the builder didn't have to negotiate anything to sell homes. I will still shop around and see what I get. The only thing making it worthwhile to put up with these people at this point is the 5k in builder incentives but even if I paid it myself it wouldn't matter. My next tactic is to attempt to pit lenders against each other which usually always seems to work out better.