Anchor: While financing or refinancing your home will cost something, many consumers don’t realize they can negotiate the costs and fees before they apply.

ANCHOR: Money and real estate expert Ilyce Glink is here with some junk fees you can probably live without.

Good morning.

ILYCE: If you’re shopping for a home loan, one of the most important questions you need to ask is, what are the fees and costs associated with this loan? The answer may surprise you. Sometimes lenders will advertise very low rates, but the APR (Annual percentage rate) of the loan is much higher because of hidden fees and costs. Or, you might get a zero point zero fee loan which has an APR that is higher than a loan on which you’ll pay some fees.

May 4 Loan Rates

                   Loan A     Loan B

RATE: 6.25 % 7.00 %
POINTS/FEES 2.50 % 0.00 %
APR: 6.49 % 7.08 %

ILYCE: Lenders make it difficult to compare fees on an apples-to-apples basis because different lenders gives fees various names. Real fees are attached to a product or service that the lender has to pay for, like the credit report and appraisal, although they can be “junked up” if the lender tacks some profit onto the real cost. A “junk” fee is a fee that serves no real purpose other than to pad the lenders profit.

Common “Junk” Fees
Document prep fee
Underwriting fee
Tax escrow fee
Water certification fee
Flood certification fee

ILYCE: So many lenders are now charging junk fees that they’ve become a regularly accepted part of the business. The real issue is how much extra are you paying. For example, your lender may charge you $50 for a flood certification fee or $100. Your doc prep fee may be $100 or $350. Your underwriting fee could range from $150 to $400. Plan to spend between $700 and 1 percent of the loan amount on whatever fees your lender charges. But for that kind of money, you should get an excellent interest rate.

Shop Around for the Best Rates
Credit Union
Local mortgage broker
National mortgage company

ILYCE: Do your negotiating ahead of time. Once you sign your application, you’ve just sealed the deal.