Are You Paying Too Much for Mortgage Fees?

Overcharges for mortgage fees are more common than they used to be, a new study finds and dubious fees may mean consumers are overpaying to get a mortgage, according to data collected from more than 10,000 recent borrowers by the National Mortgage Complaint Center, a watchdog organization that helps consumes avoid overcharges.  Here are the most common mortgage overages and how to avoid them:

• Inflated Credit-Report and Courier Fees  Some lenders are charging up to $65 for pulling your credit report.  That is unusually high, considering the fact that credit reporting bureaus only charge $6 to $18 per report.  Using the same tactics, some lenders charge courier fees for shipping your closing documents for as much as $100, while the majority of overnight express services only charge $22. Answer:  Tell your lender, up front, that you refuse to pay any more than the going rate for these services.

• Document Prep and Administration Fees   The origination fee should include these services, so don’t pay them! Answer:  Ask your lender to waive these fees.

• Yield Spread Premiums    Lenders increase your interest rate slightly to include origination and other fees so you don’t have to pay them out-of-pocket at closing but some lenders and mortgage brokers are double dipping—by charging both the fees and the higher interest rate. Answer:  Ask your broker directly if a firm charges you a yield spread premium.  If so, you shouldn’t pay any additional fees.

• Padded Title Insurance Fees    When you are shopping for lenders, look for all the above, plus look out for those who don’t tack on a lot of extra charges for services such as title search and document preparation.  Theses can add hundreds of dollars to your closing costs and they really should be included in the price of title insurance, which depending on where you live, can be as high as $6,000.