Junk Fees: Ones to Look For—and Get Rid Of
It must be reiterated: When buying a home, be vigilant! Although your eyes are glazing over as you examine all those statements and piles of documents, be strong about questioning every listed fee. In some cases you can point your finger at your seller, lender, or escrow company. Also, ask questions to make sure the closing company hasn't mistakenly added any sellers' fees to your side of the form as well.
"If it walks like a duck and quacks like a duck, it's a duck!" Well, some fees are not all they are quacked up to be. They are junk. If you see the ones listed below, scrutinize them and ask if they are necessary or negotiable.
Mortgage Loan Fees
Application fee-This can sometimes be reduced or removed.
Assumption fee-This can be too high.
Courier fee-Was a courier ever used and is this necessary? Ask for details.
Points-Are they what you agreed to?
Lender's attorney's fee-Ask to have this removed.
Lender's title insurance-This can often be too high.
Extra costs for appraiser's photography-This is just silly.
Fee to receive a copy of your loan schedule printout-Ask to have this waived.
Origination fee-Usually another name for loan points.
Download document fees-These can often be waived.
Title Fees
Document preparation fee-This is often too high.
Escrow charges-These can often be too high.
Impound setup-This is an extra fee.
Loan tie-in fee-Try to negotiate this away.
Underwriting review fee-Try to get this waived.
Warehousing fee-This is a junk fee that covers the cost of storing your documents. Get it removed.
Writing and managing documents fees-Ask to have these removed.
Sub-escrow fee-Ask to have this waived.
Miscellaneous
Realtor commission-Make sure it's accurate.
Closing review fee-Ask to have this waived.
Document drawing/signing fee-This is often too high.
Padding-This should come back to you and is only used as backup money.
Another Fee to Consider - Paying the Lawyer
How much is a reasonable amount to pay for a lawyer? Wow, that is a tough one. Lawyers' hourly fees can range anywhere from $175 to $500 an hour, or more, depending on your location and how willing you are to hire a big firm or an individual lawyer. I always prefer to ask for a flat fee payment. That way you know what you are going to pay right from the get-go. On average a lawyer could charge around $1,000 to do the entire process. Of course, if things get tricky or difficult and problems arise with the seller, your lawyer fees may go up. But if that happens, make sure to ask right away, "How much more is that going to cost me?" And also keep in mind that new and preconstruction closings can and often do drag on for months, costing you more in lawyer fees.
-Michael
Michael Corbett is Trulia's real estate and lifestyle expert. He is also the host of EXTRA's Mansions and Millionaires on NBC. In addition to his regular segments on ABC's The View and Fox News, he is a national best selling author with three critically acclaimed real estate books:Find It, Fix It, FLIP IT!; Ready, Set, SOLD! and Before You BUY! His years of experience in buying, renovating, and selling homes have made him a sought-after nationally recognized real estate expert.
