6 Mortgage Fees You Should Always Negotiate (and 3 You Can’t)
Many new buyers think mortgage fees are non-negotiable. You apply to a lender, complete mountains of paperwork, get the approval and pay a fixed rate that the lender sets — end of story.
Nope, not even close.
The good news is that both the home sale price and mortgage fees aren’t set in stone and lenders who want your business will work with you if you push for lower fees. Negotiating can save you thousands of dollars on the total cost of a mortgage at the closing table. Here are the six mortgage fees you can negotiate and three you can’t.
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The Mortgage Fees Worth Haggling Over
1. Origination Fee
The origination fee is what the lender charges to set up the loan and handle the paperwork. The fee is a percentage of your total mortgage, typically between 0.5% to 1%. It’s worth asking the lender if there’s any flexibility. Here are ways you can push back:
Shop around and compare estimates from several lenders to use as leverage.
Ask your lender to match the fee.
If the lender won’t reduce the fee, ask for a lender credit that can help bring down your closing costs.
2. Loan Application and Processing Fees
Lenders have control over processing, underwriting and application fees, which means they’re negotiable. They are often listed as separate line items or combined into the origination fee. Here’s how to negotiate:
Call out competing lender offers that don’t charge separate processing and application fees.
Ask the lender to remove or lower the fees if you move forward with them.
If they’re not flexible, ask for a credit on other closing costs.
3. Discount Points
Discount points are upfront fees you pay to lock in a better interest rate. Lenders set the cost of each point, but how much your rate goes down can vary per lender -- and it’s worth discussing to see how much money it will save you over the term of the loan.
Ask the lender to show you options side by side — with points and without — and when you’d break even.
If it doesn’t make sense, skip them and ask the lender to lower other fees instead.
Use quotes from other lenders to try to get a better rate for the same cost or pay less per point.
4. Rate-Lock Fees
A fee that is often negotiable in a competitive market is a rate-lock fee. Many lenders charge a baseline rate lock for a typical term of 30-60 days. However, this may be increased if your closing is delayed.
How to push back:
Ask the lender whether there is a promotional offer with a no-fee lock period.
If the closing is delayed due to the title company or the lender, request that the fee be waived.
Point out quotes from other lenders that don’t charge rate-lock fees.
5. Title Insurance Company Costs
Title insurance company fees are determined by a third party and can vary. To get the best deal, compare closing service fees and premiums from different title companies. One way to do this is to ask your realtor to recommend a title insurance company that offers a low rate. It always makes sense to shop around.
Mortgage Fees You Usually Can’t Negotiate
There are some fees outside a lender's control that can’t be negotiated. These are set by your state or local government and independent companies.
1. Appraisal Fee
Lenders order a home appraisal to evaluate the property’s value and the local market for the home you want to buy. These fees are determined by an independent appraiser or appraisal management company, so you usually can’t negotiate them, although there may be slight variations between companies.
2. Credit Report Fee
Credit bureaus charge lenders a fee to run your credit history and FICO score for underwriting your loan. There’s usually little wiggle room to negotiate or waive these fees.
3. Government Recording Fees and Transfer Taxes
Local governments set recording fees for filing your deed and mortgage. Some government agencies charge transfer taxes or stamps based on the home’s selling price. You may be able to negotiate with the seller to pay these fees and taxes, but you can’t negotiate with Uncle Sam.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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