Mortgage Application Fees Explained
Most lenders and mortgage brokers will take your mortgage application free of charge and present you with your loan options. Since it typically takes some time to do this analysis and present you with the information, they do incur some costs to do the mortgage analysis.
If the company does a good job then they actually need to evaluate your application by factoring in the following:
-your credit score
-see if any credit issues are a problem or can be explained
-see if your income can be documented properly and is acceptable to a lender
-research what loan programs are appropriate for you
-match you up with potential lenders
-factor in the debt load you can carry on an ongoing basis
-other factors also go into this evaluation
Why You Shouldn't Pay Application Fees
As you can see, evaluating a mortgage application is labor intensive. But if they are trying to earn your business you don't have to pay any application fee. If they want to charge this, move on to someone else. There is an enormous number of people both online and in your community who will take your application for free.
At most you should reimburse them for the cost of the credit report they run (if they do this at all). Make sure you are reimbursing them for the credit report, not paying a markup. Most credit reports that lenders use don't cost over $40, and typically around $20-$30 for credit report. If someone is charging you $75 for your credit report, it may be that they are building some profit into this.
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