I can't tell you how many Good Faith Estimates(GFEs) that I have reviewed. But it is a lot!! And I am always amazed at how different people and different companies arrange their fees. Some are pretty generic and basic, like mine. Others are elaborate in their descriptions like the Loan Officer is a walking thesaurus. Some even have some extra special EXTRA fees that I don't agree with. But the fact that they are so different just tells me that one cannot really compare a GFE line by line. The borrower must go to the bottom of the closing cost summary and look at the total. Ignoring the prepaid taxes and insurance as well as the title fees.... Because those fees will be the same regardless of which loan is chosen. There are a few ways to help your self though. For example: Ask the lender to put all of their fees on the discount line. This little trick may save you money come tax time. (Consult a CPA)
I get into discussions about junk fees a lot. These are fees that are tacked on by loan officers to pump up the profit in the deal. And the number one culprit.... The Admin Fee.
Or is it?
If I broker a loan to a lender who charges an Admin Fee.... And I, in-turn, pass that on to the borrower.... is that a junk fee? This is absolutely 100% not junk. Anyone who says that it is uninformed!! That same lender could rename the fee a ‘Funding Fee' and no one would bat an eye. Why is that? Maybe they are getting their advice from someone who needs to learn to keep their mouths shut about things they don't quite understand. Like the person who says.... ‘Oh, you can get a better rate at ABC Mortgage Company". Uh, really? Like that was fast. How did they take a full loan application and pull credit and line up the borrower with underwriting guidelines so fast? Maybe ‘these people' should be lenders. I mean, I can't tell you how many times I have heard people say that.... with ZERO knowledge about the borrower's current employment, savings and credit profile.
Fees are real. People have to get paid! Lenders demand a certain amount of fees up front to cover overhead. Processing, underwriting, the light bill.... Ect. These are real. And if you don't pay those fees on the Settlement Statement, where did they go? Well, if you have wondering..... they went into the rate. Which means that you will pay those fees over and over and over again during the life of the loan. Which isn't bad if you only stay for 3 or 4 years, but you aren't coming out too good on your real estate transaction in that short of time frame either, which may be another blog topic.
My BEST ADVICE to anyone getting a home loan. If you do not feel 100% comfortable with your lender's rates and fees... get a second(or third) opinion. Don't get too caught up in what the fees are named. DO get caught up in the total closing costs... not to be confused with prepaid items(taxes and insurance). Your realtor can help too!!! They see a lot of GFEs as well... and can refer you to an Honest Mortgage Lender if you aren't getting a great deal!!!
DallasLoanGuy.com originates Texas Home Loans and specializes in running EVERY file through Automated Underwriting because I truly believe that EVERY loan file deserves the efforts of 'no stone goes unturned' in looking for the best deal.
Tom Burris
DallasLoanGuy.com
Dallas, TX
"A Home Loan for Every Texan"
That's a good post, Mr. Tom...
I'm the lender and title company's walking nightmare. I always require that they send me the final closing statement and loan documents at least two days in advance of closing, and then I usually find myself lining through stuff I'm not going to let my clients pay and sometimes noting errors in the lender's papers.
Title companies aren't any better than mortgage companies when it comes to pumping up charges. Courier fees? Get real. If they want to pay me a currier fee for wagging the thing down there to open title, I'll be glad to pay them for couriering it to the lender.
Recording fees? They'd better charge my customer net. And most of those other unreasonable fees get the red pencil, too. And interestingly, they love seeing me come in the door with another deal.
Tom... what's a prepaid fee? Is that the fee for your vacation? ;o) <teasing everyone>
Seriously.... good explanation. But in reality, there really shouldn't be more than 2 fees from the lender's sice, outside the points. I have seen some lenders stick their fees on the title insurance side. SAD....
Bill, I am currently working a deal where I had to front load some fees and buy down the rate to get this guys rate down for qualifying(wife cannot be on mortgage so income looks low). Realtors just need to understand WHY we price our deals the way we do before commenting out of professional courtesy. When the borrower is a realtor referral, I discuss this with realtor upfront.
Jeff, I am tinkering with how I do my fees. I don't like how the company template is set up.... too itemized.
TOM - excellent post. I once had an attorney tell me the Up Front MIP on an FHA loan looked high.
"Maybe they are getting their advice from someone who needs to learn to keep their mouths shut about things they don't quite understand." I didn't mind explaining to Mr. Atty how the FHA loans work. Maybe next time he won't freak a borrower out and create issues that don't exist.
Great advice on getting a second or third opinion -- just make sure they are from someone in the know.
LOL.... Atty couldn't keep his mouth shut? Really?
Was that a little brash?