Posted: Tue May 22, 2007 7:19 am Post subject: bank upfront fee - pls help
hi all,
am applying for my first loan and bank is asking for app fee, appraisal fee, processing and credit upfront of $400. Is this normal? I thought all this is paid at closing after loan gets approved?
what happens if they reject the loan? do i get the money back? also do lenders work the same way? what r the pros and cons?
Some lenders do require upfront fee's vs paid at a closing. One of the downsides to upfront fee's is that you may lose the money if you don't close the loan. It's common for the appraisal fee to be paid up front, the other fee's I'm not sure.
The reason they do this is in case you decide to not go with them for the loan, they are not stuck with $100's of fees for a dead loan. The downside to paying at closing is this can give lenders the chance to rack up tons of misc fees and at a higher rate($450 for appraisal vs. $350), but then again you dont pay till closing. Go with a bank or lender you feel you can trust and you should be set.
Some of the mortgage pro's here can help with the other fee's but its not uncommon for the appraisal to be paid by you upfront.
Best of luck! _________________ Serving Appraisal needs in Arizona
www.4realvalues.com
Some lenders do charge application and appraisal fee at the time a person applies for a loan. But you should ask under what circumstances & to what extent these costs would be refundable if you decide not to take the loan from them.
I know about some lenders who won't ask for the charges upfront and these would have to be paid at the time of closing. You can contact them instead of going with this lender who is asking for many of the fees to be paid upfront.
Posted: Tue May 22, 2007 10:31 pm Post subject: RE: Refundable loan costs
Hi Xmljar,
Welcome back.
There are banks which accept the application fee, appraisal fee, processing fee and upfront fees at the time of closing. But some banks and financial institutions do charge the fees prior to closing.
Some lenders may refund the application fee if you are denied. However, this may vary from one lender to another.
Most larger banks because of the volume they do charge an upfront fee that is nonrefundable. You should probably check with a couple of brokers. Most brokers don't charge an application fee or anything until you are ready to get the appraisal and then you would of course pay that because the appraisor gets paid even if the loan doesn't close.
There are fee's of approx $100 to run a loan through a full pre-approval process. Credit,DU and LP plus any overnight fee's for disclosures etc.... _________________ Cedric Kalvesmaki
***Professional Disclaimer***
While I am a Mortgage Professional, this advice is generic in nature only.
Although I don't charge upfront fees, I know lenders/brokers that do and I understand the rationalization.
What hasn't been mentioned (and is at the core of this issue) are the following:
- The lender/broker does have a sunk investment in every borrower it courts in the loan process...Some lenders don't charge for credit reports, but they cost every lender regardless. Time is invested on the front end in the way of prequalification, application gathering and loan search/pricing evaluation---some people sell there time at X per hour to their employer and some sell give their time away in the hopes of repayment on the backend (at closing).
- The upfront fee trend started after enough lenders/brokers got wise to the fact that "borrowers shop and you don't win them all".
xmljar
