Negotiable Fees
What Fees are negotiable with a lender?
Below are all fees that are negotiable with a lender and or closing entity. These fees are spelled out in ranges ($0-$1000.00) of costs and to what should be an acceptable amount. Depending on your particular credit worthiness, and actual qualification via loan guidelines, a lender does have the power to reduce or delete certain fees. We have done our best to show you “acceptable” ranges and what your lenders fees should be.
REAL WORLD: If you know that you have good to excellent credit, and know that you qualify for the loan applied for, negotiate every fee listed! Conversely, if you have poor to “just OK” credit and may have a question about whether you qualify (because of your credit rating), your bargaining power may be reduced. Lenders and brokers do work harder to get certain loans approved because of credit and possible income hurdles. We recommend getting at least 2 Good Faith Estimates to compare lenders rates and fees. 3 are optimal. Note: We are not saying that you cannot lock in a fair rate and fees…but you must face the reality of your circumstance and possible reduced “bargaining power” - because of your adverse credit rating…
**Line # - 801: *LOAN ORIGINATION: Limited to a maximum 1% of the loan amount for FHA, VA and USDA loans. It is negotiable as to how much can be charged for a conventional or Jumbo loan. This fee is paid directly to the loan officer and/or lender. NEGOTIABLE FEE
**802: *LOAN DISCOUNT: One discount point represents 1% of the mortgage amount. It is a cost associated with getting the interest rate on your new loan. Rule of thumb: The lower the interest rate, the higher % the discount points. Thought: “discount” stands for discounting (lowering) your interest rate. NEGOTIABLE FEE
*804: CREDIT REPORT: Charged by your lenders particular credit reporting agency. When charged on the GFE as a credit report it is non-negotiable. ($12.50 - $55.00) REAL WORLD: Some lenders will not charge a credit report directly - but combine it with or (call it) in another term - i.e. Administrative fee, document preparation, or application fee. **When charged in this manner, it will not show under line 804, but is required to be shown as an Origination fee. It then becomes a NEGOTIABLE FEE. Do your best to try to get the fee only reduced not deleted.
**808: MORTGAGE BROKER FEE: This fee is either a percentage of the loan amount or a flat fee charged directly by the lender or broker. This fee is paid directly to the lender or broker as income. Some lenders and brokers will charge a mortgage broker fee in the place of an origination fee (Line 801). NEGOTIABLE FEE
**810: PROCESSING FEE: This fee is charged by the lender or broker as a cost of processing your loan. This fee is either paid to a staffed employee or third party to process your mortgage loan. This fee can be combined with other fees and is paid to the lender or broker directly. NEGOTIABLE FEE
**811: UNDERWRITING FEE: Charged by the lender to support the specific loan program guidelines and delivery to the borrower. The lender has either a paid staff member or an outside source to “underwrite” (provide evidence) that all information provided on the loan application supports what was stated. Conventional and Jumbo loans fees range ($250.00 - $850.00). Some lenders will lump other fees into one Underwriting fee. These fees may be called a tax service, flood certification, commitment fee, administration fee, processing fee, document preparation fee, wire transfer fee or other. If you are using a mortgage broker, this fee is not normally negotiable. If you are using a lender, the fee is a NEGOTIABLE FEE.
OTHER LENDER FEES
RE-DRAW FEE: This fee is charged if a closing package and funds are sent to a closing - and the closing does not take place on that day. This will require the lender to “re-draw” or re-do the closing package incurring more costs. ($150.00 - $ 250.00) NEGOTIABLE FEE
**APPLICATION FEE: This fee is charged by the lender to try and secure a borrower to their company. If a loan does not close - the lender will use this fee to offset costs that have been incurred during the loan process. The Florida office of financial regulation states that this fee must be refunded to the borrower at closing of a loan. Rule of thumb: Don’t ever pay an application fee. ($100.00 - $450.00) NEGOTIABLE FEE
**AMORTIZATION FEE, MODIFICATION FEE, COMMITMENT FEE, RE-INSPECTION FEE, LENDER FEE AND NEW LOAN ADMINISTRATION FEES are all fees normally paid directly to the lender. NEGOTIABLE FEES
*Compensation to Broker from Lender (not paid out of loan proceeds) This is called the Yield Spread Premium. This fee is paid directly to the mortgage broker or lender by the end lender or investor. This fee is not paid out of pocket directly by the borrower! It is directly related to the interest rate charged to the borrower. Rule of thumb: the higher your interest rate, the more the yield spread paid to the broker or lender. It is expressed as a percentage only of the loan amount. **Licensed Mortgage Brokers are required to disclose the maximum yield spread premium they can earn within 72 hours of loan application via Good Faith Estimate (normally 0-3% of the loan amount). Licensed Mortgage Brokers are required to again redisclose to the borrower the exact yield spread premium they will earn when the loan is locked. It is this number that can be used in negotiation. This fee is negotiable by having your lender or broker credit you by that amount towards closing costs. NEGOTIABLE FEE - VIA LENDER CREDIT TOWARDS CLOSING COSTS
**1101: CLOSING / ESCROW FEE - Charged by the entity handling the closing. This fee is paid directly to the closing attorney or Title Company. ($150.00 - $750.00) NEGOTIABLE FEE
**1105: DOC PREP FEES - Charged by the entity handling the closing. This fee is paid directly to the closing attorney or Title Company. ($50.00 - $250.00) NEGOTIABLE FEE
**1106: NOTARY FEES - Charged by the entity handling the closing. This fee is paid directly to the closing attorney or Title Company. This fee is used to notarize documents needed to be recorded or made official. This is normally handled by the closing attorney or staff member present at the closing. ($50.00 - $ 150.00) NEGOTIABLE FEE
**1107: ATTORNEY FEES - Charged by the attorney handling the closing. The closing entity may outsource the closing to an attorney who requires a fee. Normally, the attorney is a staff attorney. This fee may not be negotiable with all firms. ($150.00 - $1000.00) NEGOTIABLE FEE
**1109: SIMULTANEOUS ISSUE POLICY - this title policy can be purchased at the closing by the borrower. It is the same policy provided to the lender to show no liens and clear title that can be simultaneously issued to the borrower. This policy can be used by a borrower in the future to save money on title insurance via a “re-issue” of the same policy. It is not required to be purchased, but recommended to buy a Simultaneous issue policy ($25.00 - $125.00) NEGOTIABLE FEE
**1111- 1112 - OTHER TITLE CHARGES - there are other fees that the closing entity can charge for a closing. These fees are described below. Other fees include but are not limited to: ELECTRONIC DELIVER FEE, COPY FEE, FAX FEE, COPY OR FAX FEE, and COURIER FEE OR DELIVERY FEES. All fees are paid directly to the closing entity. ($10.00 - $150.00)NEGOTIABLE FEE
**1300: ADDITIONAL SETTLEMENT CHARGES: These charges are paid directly to the lender. We feel you should not pay any of these charges unless required to by your sales contract.
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