Q. Can you explain all the lender fees in a loan?
A. Almost all lenders charge some kind of closing fees - you just don't want to be paying too much or paying for unnecessary ones. Fees can vary from state to state and region to region.
At the beginning of the loan process, your lender is required by law to give you a list of expected fees, known as a good faith estimate (GFE). This document gives you a line-by-line estimate of expected fees as well as to whom or what the fee is paid.
Since it is in the lender's interest to proceed with the loan, some of these fees may be able to be reduced or eliminated simply by asking about them - especially if they seem questionable. If the lender can't give you a straight explanation, it could be a sign to look for another lender to avoid some mortgage junk fees.
Try to find comparable examples in order to show the lender or broker how your fee seems excessive. Shopping around for a few potential lenders - preferably those that don't charge an application fee - is a good way of doing this.
At the closing, make sure the fees listed on the HUD-1 settlement statement match those on the GFE. If they don't, ask the lender for an explanation and be prepared to negotiate with them to see whether they will reduce or waive the fees.
It is usually not worthwhile trying to completely avoid closing costs as a way of not having to deal with mortgage junk fees. Lenders that offer no-point or no-closing cost loans often make their money by charging a higher interest rate. Similarly, you should be cautious about the benefits of loans with "all-in-one", flat-rate fees.