The Big Five Junk Fees at Real Estate Closing

Everyone knows that homeownership is expensive, but at first glance, this extraordinary expense seems to defy the laws of mathematics.  If you are gainfully employed, you have probably scrolled through real estate listings at some point, and if you found a house you loved, maybe you opened the calculator on your phone app.  You subtracted the amount you could reasonably expect to place as a down payment from the sale price to get the amount you would need to borrow for a mortgage.  Then, based on the interest rate you thought you could get, you calculated your monthly payment for a 30-year mortgage, and it sounded manageable.  Once you met with a loan officer, though, the situation began to seem bleak.  Before you can get to the manageable mortgage payment, you must clear the hurdle of getting through closing.  The closing costs associated with a real estate purchase are a nightmare for prospective buyers, and recently, the Consumer Financial Protection Bureau (CFPB) has begun to call them what they are, junk fees.  If you were caught off guard by closing costs and now, after buying your house, are struggling to keep up with your mortgage or other debt payments, contact a Philadelphia debt relief lawyer.

CFPB Warns Consumers of Pointless Fees That Bulk Up Closing Costs

When you look at the itemized list of fees you must pay at closing, it is so long and opaque that you would think a satirist made it up.  Some of the closing costs are genuinely unavoidable, but when your real estate agent totals up more than 100 fees that you must pay, the only possible explanation is that some of these are unnecessary or inflated.  The CFPB has singled out the following as the trashiest of junk fees that buyers must pay at closing:

• Buydown fee – This is a fee that you can pay the lender at closing in exchange for lowering your mortgage interest rate. If you have that money, it would make sense just to add it to your down payment.
• Credit report fees – Buyers must often pay about $50 to run an additional credit report just before closing, even though the lender has been scrutinizing your credit history for months.
• Property appraisal fees – It makes sense for an appraisal to happen early in the sale process, but it does not make sense for the buyer to pay an exorbitant amount for it at closing.
• Title insurance – Title insurance protects the lender if the buyer later discovers that there is a lien on the property. It pays for legal fees for resolving the lien.  It is not truly a junk fee, because later discovering a lien is a possibility, but the fee does not have to be so expensive.
• Mortgage origination fee – This is the fee the lender charges the buyer upon initiating the mortgage loan application. It is usually one percent of the mortgage principal amount, or slightly less.

Contact CONSUMERLAWPA.com About Junk Fees

A Philadelphia consumer law attorney can help you if junk fees are jeopardizing your homeownership.  Contact at CONSUMERLAWPA.com to set up a free, confidential consultation.

Source:

cbsnews.com/news/mortgage-junk-fees-cbs-news-explains/