What if I have bad credit?

Contrary to popular belief, your credit score should not have a significant effect on the amount of fees you pay for a loan. You may be considered a "high risk" borrower, which will be reflected in your rate, but all too often unscrupulous Loan Officers will try to convince you that excessive fees are also a result of your credit score.


What should I expect to pay if I buy down the rate?

Most sub-prime loan programs offer a 1:2 rate buy down option. Meaning, if you want to reduce your rate by 50 basis points (7% down to 6.5%) then you can expect to pay 1% of the loan amount.

On convention or government loan programs, the buy down costs can be even great than 1:2 and will vary from Lender to Lender.

If you are considering buying down the rate, simply divide the cost to do so by how long you intend on staying in that particular loan program to see whether it is cost effective.


I was charged to lock in my rate

Get a copy of your rate lock from the beginning. Predatory lenders may surprise you with extra fees at settlement by telling you they had to pay to re-lock your rate. Now, if rates are higher than where they were when you started the loan process and your lock did legitimately expire, then yes there is typically a cost to re-lock your loan. However, if you don't have a copy of your rate lock and don't know when it expires, you have no way of knowing if the fee is warranted.

Also, there is typically a premium to the rate or an extra fee if the rate lock is longer than 30 days, but anything under that should not cost extra.


There were no title charges listed on my Good Faith Estimate

Particularly when considering purchasing a home, you need to take into account the cost of transferring ownership. Many of the costs associated with doing so are taxes from the state and local government, however the fees charged by the title company can vary greatly.

Unfortunately, the mortgage industry is fraught with "kickbacks" and excessive fees even from title companies. Some unscrupulous title companies will pay an equally unscrupulous loan officer an illegal fee for sending them their loans, which is then tacked onto your title charges. A competent Loan Officer will get what's called a Pre-Hud from the title company and include that information on the Good Faith Estimate so you know if advance what is being charged.

In many cases, you have the right to choose your title company or at least choose from a list of approved title companies. It can be as important as shopping for the best rate. When you contact them, just provide the loan amount and the address of the property and they should be able to provide you with a pre-hud in a day or two listing your recordation and transfer taxes, as well as their fees.


The Lender won't refund my application fee

Before you pay the Lender any money, you should clarify whether or not it's refundable if you change your mind or the terms of the loan change. Often times, a Loan Officer will try to get an up front fee in order to give you a sense of obligation to their company. Or will even knowingly over promise you a better rate and fees in the beginning so that even if you do cancel, they have walked away with something.

Now, it should be noted that just because they charge an application fee doesn't mean they are a predatory Lender, however you should consider this fee when comparing Lenders.