DEAR BOB: After reading your recent list of “nonsense” mortgage junk or garbage fees some lenders try to impose, when I recently applied online for a home equity loan I realized I was about to become a victim of a major lender. The lender wants to charge me a loan origination fee, appraisal fee, credit report fee, processing fee, underwriting fee, flood certification, funding fee, $100 escrow settlement fee, $150 title fee, $15 courier fee, $15 wire fee, $75 recording fee, $80 intangible tax and $235 mortgage tax. What is your evaluation of these charges for a home equity loan? –Marydelle P.
DEAR MARYDELLE: Most of those are unnecessary junk fees you should not pay.
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Virtually every local bank and credit union will eagerly make you a home equity loan or home equity credit line (HELOC) without any junk fees if you have a FICO (Fair Isaac and Co.) score around 700 or higher.
I have obtained many home equity credit lines over the years from major lenders, such as Chase and Wells Fargo, without paying any up-front junk or garbage fees such as those you list.
The only legitimate home equity loan fees on your list that I wouldn’t resist are the local mortgage tax, the intangible tax (whatever that is), and the recording fee. The other charges you list should be absorbed or paid by the home equity lender if they want your business.
MORTGAGE BROKER REVEALS SECRETS
DEAR BOB: I am a longtime independent mortgage broker for more than 20 years. My business comes 100 percent from satisfied former borrowers and real estate agents who know I will treat their home buyers right. If I can’t arrange a mortgage for a specific situation, I tell the prospect quickly and we part as friends. Often, I know of “secret lenders” who will make mortgage loans not available elsewhere. However, I always reveal the borrower’s costs up front, never imposing any last-minute junk or garbage fees as some of my dishonest competitors do. Congratulations for exposing those fees, which nobody else writes about –Jonathan C.
DEAR JONATHAN: I wish your mortgage brokerage services were available in every city. Why don’t you open a nationwide franchise chain “Honest Mortgage Brokerage?”
It is refreshing to hear from an “honest mortgager broker” who doesn’t trick borrowers at the last minute when they are most vulnerable and will pay unnecessary loan fees when they have no other choice to losing their home purchase.
I frequently recommend experienced mortgage brokers like you who can often arrange “impossible” mortgages for home buyers with unique situations. As long as the fees are disclosed up front, borrowers can then decide if they want to pay the expenses or not.
What especially irritates borrowers is when their loan charges are far higher than were disclosed on their so-called “good faith estimate” which we both know is a joke because there is no enforcement.
RAISING HOME SALES COMMISSION PAID OFF
DEAR BOB: Thank you for your article some time ago about real estate sales commissions. The home sale market in our town has been slow since January. Our listing agent, a trusted family friend, warned us home sales were slow so we listed with an asking price about $5,000 below market value. That didn’t work. After two months, she suggested we raise our sales commission to 7 percent with 4 percent to the selling agent. It worked like gangbusters! Within a week, we had two purchase offers. We accepted the best one and took the other as a “back-up offer.” Our home sale recently closed. Although we paid a higher than normal sales commission, we got an all-cash sale for almost our full asking price. Thanks for that great advice to raise the sales commission –Durk H.
DEAR DURK: In your situation, it was obviously more important to get your home sold than to net the highest possible sales price. Not all home sellers are so highly motivated.
Some home sellers prefer to cut the sales commission by one or two percent and wait “forever” to get their homes sold. Obviously, selling your home was more important than squeezing the last dollar from the sale.
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