5 Hidden Fees To Avoid

five-hidden-fees

Document Processing Fees

There are multiple documents that must be prepared by the lender and/or your mortgage agent associated with obtaining a mortgage or refinance loan. These fees sometimes slip through your radar undetected, often because of how anxious the borrower is to get their loan processed. Fees for a mortgage are ever-present, but it’s imperative that you be aware of what each one is – and why it’s being charged. If you see this fee, question it.

Application Fees

You might be surprised to know that you’re being charged for simply applying for a loan, but this one has gotten to be more and more common with the passage of time. While being charged for applying for a loan seems as ridiculous as paying for a glass of water in a restaurant, millions of Canadians have silently paid this fee without questioning it.

Retainer Fees

These fees are typically charged on commercial loans, but are increasingly appearing in residential loans as well. This fee is a way for the mortgage broker to pass along some – or all – of the costs associated with placing a difficult loan.

Loan Origination Fees

This is a fee commonly charged by the lender for originating your loan. The amount of the fee can vary considerably, so be sure you figure the cost into how much you’ll be paying in fees for refinancing a mortgage. A lower interest rate is worthless if these fees eat up the savings you see in terms of your interest rate.

Lender Fees

Among the fees for purchase loans & refinancing are appraisal fees and a host of other fees. Some are legitimate; many aren’t. So pay close attention to what you’re being asked to pay.

Legitimate Costs

There are some fees that are legitimate when you’re considering a purchase, equity or refinance loan. Our partners explain all legitimate fees upfront and protect you from anything unnecessary. A few examples of fees you can legitimately expect include:

 

Legal Fees

There is a time and a place for legal fees. When it’s time to purchase a home or refinance your existing mortgage, an attorney will provide an invaluable service in registering your mortgage or paying the disbursements on a loan – ensuring that the proper parties receive loan funds. Expect this fee.

Mortgage Insurance Fees

If you have a very high loan to value ratio – meaning that the amount of your loan will exceed 80% of the value of your home – mortgage insurance is required. Not to be confused with life insurance, CMHC or GE insurance is paid for by you, but the lender is the beneficiary. This is nothing more than loan insurance, which guarantees that your lender will be paid in the event that you default on your loan.

Appraisal Fees

While nobody wants to pay for an appraisal, most lenders will require one be done prior to approving a refinance loan. Occasionally a mortgage broker or agent will come along offering to pay this expense for you. While this does happen, be extra cautious whenever you get this particular offer. In some cases, a mortgage broker is playing a game of hide and seek with fees. You may initially think the appraisal is being paid for on your behalf only to discover very late in the process that the mortgage broker is advancing the cost of the appraisal to you – and that you’ll pay for it at the closing table when your attention is elsewhere.

Inspection Fees

This expense is incurred while processing the mortgage application. During the application the lender may want to examine the subject property. Usually paid by the borrower in advance, or deducted from the advance of the mortgage funds.

Broker Fees

Some borrowers have significant credit issues that make obtaining financing very difficult. In this situation, the extra time spent on a file may require additional compensation in the form of a broker fee. It is important to note that broker fees should not be an extra “out-of-pocket” cost for the borrower. Broker fees are customarily added to the mortgage amount and spread out over the term of the loan making them easy to manage. Broker fees should not be requested by the mortgage agent up front, only when the mortgage has closed and the borrower is happy with the outcome.

Get FREE, Personalized Mortgage Quote

We have lending partners on-hand right now with experience in bankruptcy issues.

They believe in treating people fairly and getting them a fair interest rate as they re-establish themselves after a bankruptcy or consumer proposal.

There are many options available and they can often help. Let us show which options are available to you.

Take a few minutes to complete the online quote request and within 24 hours**, you will have the information you need to make confident decisions about your financial future.