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Mortgage Application Fees: How much should you pay?

Friday Aug 9, 2013
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So how much is ‘average’ when discussing upfront mortgage application fees? Well, it’s actually a trick question. You shouldn’t ever have to pay an upfront mortgage application fee.

Many out of state and large lenders will require an applicant to pay an upfront fee of $400-$500 before they will even put the application in. This is designed to keep the borrower from shopping the mortgage and tries to lock them in, this might be good for the lender but not wise for the borrower. My advice is: a borrower should never pay an application fee upfront no matter how they dress it up. They might say it’s a pre-payment for an appraisal or it will be reimbursed at closing or that it’s required to lock the loan. It’s not. It’s simply a tool and a junk fee. Indigo Mortgage, and most local lenders I know of here in Albuquerque, never charge an application fee or charge for an appraisal upfront. We ask for the appraisal payment when we order it which most times is a few days after the application is in underwriting already and that payment goes directly to the appraisal management company. If a borrower pays an upfront application fee and then decides to change lenders many times they have to make several phone calls and wait a month before the charge is reversed on their credit card. I have even heard of these lenders getting snippy with the borrowers once they decide to go elsewhere, but that’s to be expected when you deal with out of state and large lenders.

As always, I’m an advocate for local lenders, and with more purchase borrowers hitting the market it’s important to use a local lender as they will need quick approval letters and have to get their loans done quickly. Because out of state lenders are not here, borrowers often times are caught up in voice mail or never speaking to the same person twice. 

Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. For questions about selecting a mortgage lender, contact Indigo Mortgage in Albuquerque at (505) 836-5700. Indigo Mortgage offers five mortgage divisions including Residential, VA Loans, Reverse Mortgages, Construction and Commercial. They are licensed by the Nationwide Mortgage Licensing System (NMLS #188348), and can provide loans anywhere in New Mexico.

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