If you’re considering taking advantage of today’s low refinance mortgage rates with the best mortgage lenders like Quicken Mortgage or Amerisave, there are a number of junk fees you’ll want to avoid paying to get the best deal. Getting the best deal on your mortgage refi isn’t all about finding the lowest rates but how much you’re paying to get your new home loan. Here are several tips to help you spot lender junk fees and pay less for mortgage refinancing.
What Are Lender Junk Fees?
Anything you find on your Good Faith Estimate or HUD-1 statement called “processing,” “underwriting,” or “administration” are pretty much garbage. This includes any processing or courier fees included by your broker. There are some fees that you simply can’t negotiate, like those required by the government; however, there’s no reason to pay junk fees once you’ve drilled down what they are.
Keep in mind that your broker might not be willing to waive certain processing fees because the lender could turn around and deduct them from the broker’s commission. This doesn’t mean you shouldn’t ask; in fact, things like the loan origination fee could save you hundreds of dollars at closing.
One of the most commonly overpaid fees is the mortgage loan origination fee.
How much should you pay the broker for arranging your home loan? One percent of your loan amount is perfectly reasonable; don’t be afraid to shop around until you find one willing to work for this amount.
Another common mortgage mistake is overpaying discount points. Some lenders use points to make their loan offers seem more attractive when you’re actually just buying down the interest rate. Refinance mortgage rates are at a 60 year low so there’s no reason to pay points unless absolutely necessary.
Remember the more you pay at closing for things like loan origination and discount points, the longer it’s going to take you to break even recouping your out-of-pocket expenses. If you don’t recoup your closing costs from the lower payment amount before selling or refinancing again you’re losing money no matter how good the interest rate.
You can learn more about getting the lowest refinance rates without paying unnecessary fees or markup by checking out my free Underground Mortgage Videos.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
