Junk fees or hidden mortgage fees are up front charges made by a lender. These junk fees are expressed in dollars rather than as percentages of the loan and are itemized charges.

Fees paid to third party vendors for loan services are legitimate fees. Legitimate fees are:

Title Insurance Escrow Attorney Settlement Fee Appraisal Fee

Courier Fee Credit Report Fee Notary Fee Recording Fees

Points are upfront charges which are fees paid to reduce your loan rate. They therefore are not junk fees. They are a part of the cost of credit along with the interest rate. They are also deductible!

Per diem (Latin for “by the day”) interest is interest from the closing date to the first day of the following month. This charge depends on what day of the month the loan closed. This is not a junk fee. This is your first mortgage payment, made at closing.

Even these legitimate fees may be inflated. For example, a lender may charge $100.00 for a credit check and it really only cost $25.00. Do not hesitate to ask if some of these fees can be lowered.

Junk fees are itemized fees such as:

Application Fees Underwriting Fees Processing Fees Warehouse Fees Administration Fees Amortization Fees Affiliate Consulting Fees

Bank/lenders Inspection Fees Endorsement Fees Express Mail Fees Document Preparation Fees Origination Fees Miscellaneous Fees (anything else they want to ad)

Lenders are required to provide in writing a “good faith estimate” within three days of receiving a loan application. You may have time to negotiate or eliminate fees before closing. Once you approve the terms of the loan, be sure you have them in writing and take that with you to the closing where you should carefully review the charges before signing off.