A Perspective on Lender Fees

When you are in the middle of a real estate transaction, there is a lot of different paperwork that comes swirling at you. It can be confusing and one tends to follow the advice or guidance of their agents. The trick is, they can only offer guidance and the bottom line of understanding your paperwork falls completely on you. The present housing crisis is a great example of people not getting the best information.

One of the tidbits I’d like to look at right now is Lender Good Faith Estimates. They may look different between the different lender offerings and could be confusing, but they effectively, are all the same.

Keep in mind that it’s not what they call the fee but rather what they all add up to that has the impact on your real estate transaction.

In my own past experiences as a real estate agent, I’ve seen lender fees range from $1,800 up to $5,000 for the very same transaction fee. The more expensive lender is a good lender, but 5 grand more good? In most cases, a loan is a loan and whatever emotional environment the lender creates is just that, emotional. Marketing. Of course, sometimes that emotional anchor may be worth it to you, but if you do your homework, you won’t have need of an emotional blanket.

Be aware of waived fees.

Just because a lender is cutting certain fees in some spots does not mean that the same amount of money is not being recouped somewhere else in your contract with the lender. IE: They may say they will waive the “customary” $300 ‘x’ fee, but there may be another fee that everyone charges that for this lender, is $300 more than most! I refer to the previous example of the $3,000 difference between lenders. Yea… lender B can defer that $300 fee.

Lender Conformity

Lenders all have to conform to certain regulated standards. The commonality between lenders would be the items in the line numbers that are in the 800 series of numbers. These lines are the standard lines they have to conform to. The other fees like escrow or recording fees are estimated fees for your convenience and do not have to be accurate. They are “estimates”. Focus on the lender numbers to get the true feeling for what they are charging you.

Are You Locked In Prior To Closing?

Keep in mind that even when you are in the middle of a contract waiting to close on your new home, nerves are high and insecurities are running rampant as you worry about the financial end of the scenario. I’ve seen where on occasion, a buyer will find themselves getting adjustments to their contract with their lender for one reason or another.

If you find yourself getting your fees modified that result in higher payments for you, or other dubious issues, YOU ARE NOT in a contract with the lender until the paperwork is signed at closing. You can change lenders if you don’t like what you’re seeing, whether it be 2 weeks into a contract or at closing. Put off closing (If possible) to fix the scenario, or change lenders to get the numbers you are expecting or hoping for. Don’t take their crap. They depend on you being nervous and blindly trusting them.

One of my favorite warning signs is while you’re signing paperwork with the lender and they explain away some things you’re signing as “required by law” or some other vague explanation.

A good lender will give you some numbers that won’t change. They’ll do the contract properly and what they say is what you’ll get.

Review Your Contracts Early

One thing you can always do is rather than trying to understand the 20 pages of contract you’ll be signing at closing, request a courtesy copy of your paperwork a few days ahead of time from the title company you’ll be signing at. They CAN do that. Then you can take your time to go over things in the comfort of your home and develop questions to ask the closing agent, if you have any.

Make your agent, lender and title agent work for you. They are making their money off of fees that you are making possible by being in the contract. Protect yourself first, and make sure the people YOU HIRE to help you, do the work as YOU EXPECT. When the contract is closed, they walk away with their commissions while you have to live with your decisions, or lack thereof.

Remember, you are the boss of them. Not the other way around.

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