Mortgage Application Fees Don't Have To Be Outrageous

The three fees usually associated with submitting a mortgage application are the application fee, the appraisal fee, and the credit report fee. The application fee can range from zero to $500. The appraisal fee can range from $200 to $350, although this is dependent on your area of preference. The credit report fee can range in price as well - usually from $25 to $100 per person.

These fees might be grouped together under the application fee. Many times the lender will apply part of the application fee toward the appraisal and credit report fees. If you're planning to apply for two mortgages (one fixed, one floating), it's best to try to negotiate the lowest up-front fee possible, or find a lender that has no application or up-front fees.

A great suggestion is to apply online. Online lenders usually have smaller fees. You may pay just one, smaller fee of around $200, which will cover your initial application and credit report. Or the fee will be applied toward all of your lender fees. You'll usually be asked to give your credit card on a secured site.

Here is some knowledge (or ammunition) that you should take with you when speaking to mortgage lenders about lender fees. Way back when times were simpler, lenders often charged home buyers a flat fee to close on a loan. But as interest rates have fallen and some banks have experienced financial troubles, most lenders have begun charging for many different services that were formerly covered by the flat fee. Some mortgage experts say lenders have sought to make up their lost profits by nickel-and-diming buyers to death. Let your lender know that you want the best deal when paying fees. Let them know you know that they can ease up on you a little unless their fees seem reasonable to you.

There has been a push, both from the federal government and from Fannie Mae and Freddie Mac, the two secondary market lenders, to lower the costs associated with homeownership. By adopting technology and lowering the cost of making a loan, Fannie Mae and Freddie Mac hope to make homeownership even more widely available to more Americans.

Not every bank calls every charge by the same name, which can make comparing lenders as tough as comparing oranges and trains. Lenders are supposed to make it easy for you to know and understand their costs of doing business. At the time of the application, the lender is required by the federal Truth-in-Lending law to provide a written, good faith estimate of all closing costs. And it's supposed to accurately reflect your closing costs. Mortgage brokers recommend that you shop around for the best deals before actually applying for a mortgage.

You should also not be afraid to negotiate lower fees, and to ask for detailed explanations for each one. But the time to negotiate fees with the lender is before you sign your application. Once you've signed the application, it's too late. You've made your deal and will have to live with it.

In addition to the main three types of fees listed in the first paragraph, a lender may try to charge you additional fees for the privilege of lending you money. Some of those fees could be, 1) Lender's points, loan origination, service charge, or loan service fees (1%-3% of the loan amount); 2) Lender's processing fee ($75 - $500); 3) Lender's document preparation fee ($0 to $300); 4) Lender's tax escrow service fee ($40 - $100); 5)Title insurance cost for the lender's policy ($150 to $400); 6) Special endorsements to title ($75 - $150); and 7) Prepaid interest on the loan (per day interest charge on loan - calculated at closing).

Please note that these fees are not the only fees that you may come across. Also be aware that these are only possible application fees. There are also fees associated with closing on a home.