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What are garbage fees? in Livermore, CALivermore Homepage: Real Estate Homepage |
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Homebuyers are all too often surprised at the end of the deal when they discover they must pay new, unanticipated fees.
Federal law requires lenders and mortgage brokers to disclose fees that will be charged in connection with getting a mortgage. This must be done within 3 days after the borrowers submit a loan application.
Often the final settlement statement of fees doesn't match the initial estimate the borrowers received when they applied for the loan. One reason for this is that borrowers often change their minds about which mortgage they want between the time they apply for the loan and closing.
Lenders' fees can vary significantly. Some lenders charge underwriting fees and others charge administrative or processing fees. Some charge both. Most lenders charge documentation preparation fees, but these can range anywhere from a few hundred dollars to $700 or more.
There are miscellaneous fees that are charged at closing, in addition to customary closing costs like points or title insurance. These are commonly called "garbage fees." Taken one at a time, garbage fees usually don't amount to much.
For example, a tax service (to notify the lender that your property taxes are current) costs about $70, a courier fee is about $30. A notary fee might run $40, a wiring fee costs about $30 and a flood certificate (which is often required by the lender) is around $25.
Some mortgage brokers charge incidental fees on top of those charged by the lender, such as a processing or document preparation fee. In addition, the escrow or closing officer might add on a few more charges for drawing, recording and notarizing documents, or to cover courier and wiring costs. Add all of these fees together and you could end up owing hundreds of dollars more than you anticipated.
FIRST-TIME TIP: To avoid surprises, make sure your loan agent or mortgage broker gives you a complete and accurate accounting of all the fees, including garbage fees. Specifically ask how much the garbage fees will run and get this in writing. If you change loans during the application process, ask for an update of the fees you'll owe.
Check with the person handling the closing (attorney, closer or escrow officer) to see if any garbage fees will be charged in addition to those charged by the lender. Ask for an explanation if there seems to be a duplication of the fees charged.
Buyers aren't the only ones who pay garbage fees: Sellers pay them too. Sellers should ask their real estate agent, closer or attorney to prepare a closing cost estimate when they accept an offer to sell their home. In addition to customary closing costs like the brokerage commission, the seller's lender will charge for a payoff statement (usually about $50) and a reconveyance fee (could be another $50 or so). Sellers also usually pay document preparation, wiring, courier and notary fees. These can add a few hundred dollars to the closing cost estimate.
It's a good idea for both buyers and sellers to ask the person who's handling the closing a copy of the final closing cost estimate as soon as the figures are available. Review this before you sign to make sure that new charges haven't mysteriously appeared.
THE CLOSING: Ask your closing agent for an explanation of any new fees. If he or she can't give you a satisfactory explanation for why the fees are being charged, ask that the fees be waived. ... REGISTER BELOW TO GET EVEN MORE INFORMATION! Related Articles Also..
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