How do I avoid costs, such as lock in fees and appraisal fees, when shopping around for lender's?

Asked by Joshua A. Tremmel, New Sharon, IA Tue Jan 6, 2009

The lender I'm working with now locked me in at 7.25% and won't budge. The reasons were because my credit score and my debt to income ratio %. I have been getting advice to get quotes from other lenders, so is there any way around fees for a rate quote?

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, ,
Wed Jan 7, 2009
Hi Joshua,
The only company I know of that requires a deposit before they will even give you a quote is not that reputable around here and rhymes with "Sicken Jones".

You shouldn't have to pay anything when you are merely shopping around lenders, however you will probably need to provide income info and give permission to run a credit report so that a lender may give you an accurate estimate of rates and fees. The rule of thumb is that the lower the credit score and down payment, and the higher the DTI ratio - the higher the rate. There are rate adjustments to all of these factors that may have resulted in your rate being 7.25%.

Now once you have selected a lender, we're all going to require some sort of money up front from you, normally to cover our out of pocket cost in case you flake out so we're not stuck paying out of our wallets. These fees may include the appraisal, credit report, and inspection fees. I'm sure my counterparts would agree it's not too much to ask for a sign of good faith on your part in moving forward with the transaction once we have earned your business.

My advice to you: shop around with a couple reputable lenders who have a local presence and compare their terms. Avoid the internet and slick advertising schemes because they're almost always BS

Good luck
1 vote
Scott Godzyk, Agent, Manchester, NH
Wed Jan 7, 2009
Joshua FHA has their own guidelines for rates. The terms have recentkly changed and they do add a percentage as credit falls below 700, check with another lender to get prequalified, you can do that at no cost. if you decide to switch though, you may have to pay for a new appraisal. But rate quotes are free. stick with local and trusted lenders...
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1 vote
Ken Lambert, , Exeter, NH
Wed Jan 7, 2009
Hi Josh- I'm local, similar to Wayne below. Be happy to give you a rate quote and a GFE at no charge. What you might be thinking of is an upfront "deposit" on such 3rd party fees like appraisals, credit reports, etc that a mortgage company has to order.
We do take a small initial fee at the time or locking in a rate or submitting a complete loan application- but that fee is credited to you back at the closing. But we do not charge anything for a loan quote, etc.
Especially in these times, I don't know many mortgage brokers or loan officers that won't have you pay upfront for the appraisal fee. Thanks, and good luck,

Ken L.
1 vote
Wayne Laverd…, , Dover, NH
Wed Jan 7, 2009
Hi Joshua,

I'm not familiar with anyone charging to give you a rate quote or locking into a rate unless it's a long term rate lock (example: 90 days or more).
I'm in Dover, NH and would be more than happy to give you a 2nd opinion. My rates are ranging from 5.25% up to a max of 6.5%.

Wayne Laverdiere
New Market Lending
1 vote
Anne, Home Buyer, Richland County, SC
Fri Jun 26, 2009
Stay away from Bank of America. We were charged for an appraisal, even though the loan officer knew we were shopping around. We never signed any papers, yet he charged our charge card. Also their rates are way too high. The GFE is only an estimate which will increase at closing.
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