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Borrower beware
September 6, 2012 6:18 AM   Subscribe

Refinancing our home and caught our lender padding their fees with questionable stuff; what else should we be on the lookout for?

We're refinancing our home with our credit union after years of being at a high rate with Wells Fargo. The credit union website states the origination fee is "$1450 or 1% of your loan amount, whatever is less." Our good-faith-estimate came through with an origination fee significantly higher than that, and when questioned our loan officer revealed an undisclosed penalty had been added because we do not electronically deposit our paychecks into a credit union account (we have some very good reasons for this, btw). This penalty/fee was not disclosed anywhere in any documentation as far as we can tell. After a pointed discussion with our loan officer in which she said the fee could not be waived, she called called us back shorty thereafter (!) and said after review they would waive said penalty.

So... 1) Has anybody else had this particular issue pop up with their lender? And 2) more importantly, what other scammy fees and penalties and fine print should we be on the lookout for? For example, there is a fee for "tax service $82" in the same section as appraisal, credit checks and flood certification.

If there are other things we want to try to negotiate, is it better to do it now or wait until closing (which will be in person)?

Obviously I don't want to post the personal details of our loan application, but I will provide in case it's helpful:

-This is our primary residence, location is Minnesota, USA. Loan is a conventional 15-yr fixed @ 2.875%. Loan amount is about $60k.
-Total closing costs estimated at about $3k
-Credit union is Wings Financial.
-Property tax and homeowners insurance is escrowed.

Also, were pretty good customers for the credit union, in that we have extremely good credit, a good equity position in the property, and have sizable accounts at the credit union.

Thanks in advance!
posted by werkzeuger to Work & Money (4 answers total) 3 users marked this as a favorite
 
Its always good to get another quote from another lender just to make sure you are getting the best deal. You can compare fees then.
posted by Busmick at 6:22 AM on September 6, 2012


Definition of 'Tax Service Fee'

A legitimate closing cost used to ensure that mortgagors pay their property taxes. A tax service fee is typically paid by the buyer at the time the home is purchased, the lender then passes this sum on to a tax service agency. The role of a tax service agency is to look for delinquent property taxes and alert the mortgage company to prevent tax liens from existing against their mortgagors' homes. Since tax liens have priority over lender liens, banks wants to ensure that they, not the state, become the owner of these properties.
posted by Lucinda at 6:36 AM on September 6, 2012


Banks will always charge you for title insurance (for themselves). You however have the option of buying it for yourself. The way it was explained to me was. "You are insuring your down payment, and any future equity". So if you have no skin in the game, or you plan to sell within a few years (thus earning very little equity) you may decide not to purchase your own title insurance.
posted by Gungho at 7:24 AM on September 6, 2012


Beware of getting an estimate that will close at the end of the month so it has x days of mortgage payment included and then the actual closing is at the beginning of the month and the "x amount of mortgage payment" has been shifted to lawyers fee's or somesuch so that your estimated closing cost is still the same but the money has been shifted. Happened to me and they where not happy when I said that I'm not signing this.
posted by Ferrari328 at 11:57 AM on September 6, 2012


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