Issue Date: January 15, 2006
Are you paying too much for your mortgage?
Overcharges are common, a new study finds.
Dubious fees mean many consumers are overpaying to get a mortgage, according to data collected from more than 10,000 recent borrowers by the National Mortgage Complaint Center, a watchdog organization that helps consumers avoid overcharges. In almost every case, says NMCC founder Thomas Martin, consumers paid unnecessary fees. Here, he outlines the most common mortgage rip-offs:
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Yield spread premiums
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Lenders increase your interest rate slightly to include origination and other fees so you don't have to pay them out-of-pocket at closing. But some lenders and mortgage brokers double dip -- charging both the fees and the higher interest rate. Ask your lender or broker directly if a firm charges you a yield spread premium. If so, you shouldn't pay any additional fees.
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Extra title insurance fees
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Look for insurers who don't tack on a lot of extra charges for services such as title search and document preparation. These can add hundreds of dollars to your closing costs and should be included in the price of title insurance, which, depending on where you live, can be as high as $6,000.
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Document preparation and administration fees
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Don't pay these. The origination fee should include them. Ask your lender to waive these charges.
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Inflated credit-report and courier fees
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Sometimes lenders will charge up to $65 for obtaining your credit report. That's awfully high, considering that the credit reporting bureaus charge only $6 to $18 per report. By the same token, courier fees for shipping your closingdocuments can run as high as $100, while most overnight express services charge only about $22. Tell your lender that you refuse to pay any more than the going rate for these services.
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Walecia Konrad, an award-winning consumer reporter, is "Good Housekeeping's" news editor.
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