What Are the Signs Your Mortgage Broker Is Charging Junk Fees?

By Laura Melquist

Meet Laura Melquist, a Realtor whose journey from Division 1 basketball to real estate has been nothing short of inspiring. With a winning mindset cultivated on the court, Laura has translated this into real estate by being a negotiation expert, navigating the real estate market for both sellers and buyers.

What are the signs that your mortgage lender is charging you “junk fees”?

Today, we’re diving into a topic that’s incredibly important if you’re looking to get a mortgage. We’ll be talking about the signs that your mortgage broker might be charging you junk fees. Junk fees are extra charges that don’t add value to your mortgage process but do increase your costs. You’ll want to be aware of these so you’re not taken advantage of. Let’s break down three key warning signs.

1. Unusual or Vague Fee Names. The first sign is unusual or vague fee names. Fees like ‘administrative fee,’ ‘processing fee,’ or ‘underwriting fee’ can sometimes be legitimate—but if you see a long list of vaguely named charges, it might be a red flag. Sometimes, brokers bundle unnecessary fees into the loan under confusing terms, hoping you won’t question them. Don’t be afraid to ask your broker to explain each fee individually. If they can’t justify it, it might be a junk fee.

2: Duplicate or Redundant Fees. Sign number two is duplicate or redundant fees. You shouldn’t be charged twice for the same service. For example, if there’s an ‘origination fee’ and a separate ‘application fee,’ ask your broker why both are necessary. Some brokers may try to break a single service into smaller, separate fees to increase the total cost. Double-check your fee breakdown to see if there’s any overlap or redundancy.

3. Fees Much Higher Than Market Average. Finally, if the fees are significantly higher than what’s typical, that’s another red flag. Mortgage fees like origination and underwriting usually fall within certain ranges. If your broker’s fees seem too high, compare them with what other brokers are charging. High, unexplained fees could mean you’re being overcharged, so don’t hesitate to shop around or negotiate.

So, those are three signs your mortgage broker might be charging junk fees: unusual fee names, duplicate fees, and fees higher than average. Always ask for clarity and don’t be afraid to negotiate. A reputable broker will understand your concerns and provide transparent answers. If you have any questions about today’s topic, feel free to reach out anytime. I look forward to hearing from you!