Real Estate: 4 Mortgage Lender Fees You Can Negotiate

Part 1 of this article is entitled Real Estate: 4 Mortgage Lender Fees You Can Negotiate (Part 1 of 2), To briefly recap, lender fees are those fees that (mortgage) lenders charge to process your loan.

Discussed below are two more of the types of lender fees you need to be aware of that you may be able to negotiate.

Processing Fee:This is a fee the lender charges to process the loan. It can range from a low of $50 to a high of $150. It depends on the lender.

What exactly is processing a loan

Processing involves the entire process of your loan officer/mortgage consultant getting all paperwork from you, preparing a file to submit to the underwriter, and having the underwriter verify all of your information.

This process usually involves a lot of back and forth between the loan officer/mortgage consultant and you, the client.

Document Preparation Fee:This fee is usually explained as the cost of preparing documents for your loan to close. It can range from $0 on up to $300. Most are in the $150-$250 range.

At this point, you may be scratching your head, wondering, what is the difference between a processing fee and a document preparation fee? And, I don't blame you.

The difference between a processing fee and a document preparation fee

The difference is - practically nothing. There is a a lot of copying of papers to be done for a loan to close. The bank has to have a set, the borrower has to have a set, the lawyer has to have a set - this adds up to a lot of paper - easily several hundred pages.

BUT, to process a loan, you have to make copies. It is not possible to process a loan without making copies. So, why isn't this included in the processing fee? Remember in the first part the term "junk fee." This is another one of those.

In my opinion, smart lenders and brokers simply put one fee - a loan processing fee. Why, because you can point to the evidence. Eg, I'd explain it to clients by saying, "This fee involves paying a processor and underwriter to put together and review the file, document copying (and as you can see, we have hundreds of pages here), phone calls to verify your information, messenger services, etc."