Home Mortgage Refinancing Guide

Junk fees will not be a percentage of your loan amount but will show up as itemized charges ranging from $50 to $1,000 on your Good Faith Estimate and HUD-1 statement.

These fees are mostly invented by your mortgage broker and vary from one shady broker to the next. Here are several tips to help you recognize and avoid paying these unnecessary fees on your next mortgage loan.

The easiest way to spot them is to compare the Good Faith Estimate and Statement to see how many of the fees listed are being paid to the mortgage broker.

The person arranging your mortgage gets paid by charging you an origination fee and by marking up your mortgage rate…often at the same time. On top of this they may charge a loan processing fee of as much as $400.

There are a number of other charges you’ll find on your Good Faith Estimate that are paid to third parties like your title company. These third party fees are usually legitimate and are standard from one broker to the next in your State. Your title company for instance charges a fee to close your mortgage loan and lenders charge underwriting fees when approving your mortgage.

Keep a close eye on your appraisal fees and credit report fees if they are being paid to your broker. Mortgage brokers often mark up these services and pocket the difference after the third party companies have been paid. You can keep your mortgage broker honest by asking to see an invoice for any charges paid to third party companies.

You can learn more about refinancing your mortgage without paying junk fees or the unnecessary markup of your mortgage rate by registering for my free video tutorial using the links found at the top of this page.

Mortgage closing costs are fees including loan origination fees, underwriting fees, loan processing fees, discount points, title charges and a host of others…some legitimate, others garbage. The closing costs you will be required to pay when refinancing your mortgage are any fees paid to the mortgage broker or any third party company like the title company or your appraiser.

There are other administrative fees that come out of your pocket at closing like any unpaid interest or escrows that are a part of the cash you need to close and are not actually a part of your actual closing costs.

You can pay your closing costs several different ways. Writing a check at the title company is the most common method when purchasing your home. You have the option of including these costs in your loan amount in many cases when refinancing your mortgage. The problem many homeowners are aware of but not sure what to do about is simply knowing which closing costs are necessary and which fees are destined for the mortgage broker’s pocket…

While closing costs are fairly straight forward and you cut the fat once you know what to look for, there is another “junk fee” that many homeowners overlook altogether. If you’re a regular reader of this blog you’ll know that I am referring to Yield Spread Premium.

Mortgage brokers mark up your mortgage rate because the lender pays them a bonus for overcharging you…of course this happens most frequently without your knowledge. The good news for you is that this unnecessary markup of your mortgage rate and the commission it creates known as Yield Spread Premium can be avoided, saving you as much as thousands of dollars each and every year that you keep your home loan. You can learn more about avoiding Yield Spread premium by registering for the free mortgage refinancing videos found on this website.