Is it unusual to charge an underwriting fee to a mortgage applicant at the time the applicant makes the application?
More info on the particular scenario I’m confronted with:
It’s an underwriting fee that will be credited back* if a loan is offered and we accept the loan.
*And for all I know “credited back” really means “rolled into the loan…”
The only upfront fee I have ever paid for a mortgage was $250-400 appraisal. Of course, my credit was always run prior to paying for the appraisal so I was quite certain that I would get the home and loan. An upfront fee might be legit but is also a warning that you might be dealing with a scammer (i.e. take the fee with no intentions of offering a loan). Who is the institution you are working with? Perhaps someone here has experiences with them?
It’s a local operation called 21st Century Lending. I haven’t seen anything to ring any alarm bells prior to this but it seemed strange to ask for a fee like that upfront, esp. one that will be credited back only if the loan is approved by them and used by me. None of the other lenders I’ve talked to have done anything like that.
Why use this service?
If they are charging an up-front fee, it is likely because they have an abysmal record of loan originations - too little, too expensive, other defect (pre-pay penalty).
Well, if it’s an unusual fee, then of course I won’t use this service. This is the very purpose of my asking the question–to determine whether to use the service or not.
That’s what I am afraid of, hence my question.
I’d say not to do it. I’ve gone through 1.5 mortgages in the last six months (closed on one in August and will close on another in February) and neither have had any up-front expense other than the appraisal fee.
Just hit up your local bank or credit union (I’d favor the latter) and ask them what it takes. Someone should help you in a friendly, motivated (by commission) manner.
Remember, on financial matters, if it feels skeevy don’t do it.
Yep, based on feedback here and in a real-estate related Q&A forum, I’m telling this guy he’s officially in the back of the line…
We already have an approved loan, I’m just looking around to see if I can get a better one. It’s not worth a questionable and possibly skeevy fee like this.