Mortgage Application Fees - Do Not Pay Them
I am still hearing that companies are charging a Mortgage Application Fee just to run some numbers for clients. To me, it does not make any sense.
If you are client / home buyer, here is what you should do (this is my opinion)...
Find a Loan Officer or company that will not charge you a fee to run some numbers. Before you spend one dollar, you should know what you qualify for. Our company believes in telling you what you are applying for before you write a check to anyone. We will need to run a credit check and there is a fee for that, but we do not charge you for the credit check until your home loan has closed and funded.
If you don't qualify (YET) then we will help you find a great credit repair company that will help you improve your scores in as little as 3-6 months. Please note that there are times when credit repair can take longer, depending you the history. In either case, we will set you up in a program that will improve your scores and help you get into a home as quickly as possible.
And YES you will great service whether you qualify or not. We WANT TO HELP YOU buy your home as soon as possible and help anyone else you may know in the same situation.
If you are a Loan Officer/Banker, my thoughts are this...
I know it costs money to run credit reports and it takes time out of your day to work with clients that 'may' not qualify today. In the end, your service to them and the qualify of information you provide will help keep those clients coming back to you.
There is a cost to doing business. As a matter of fact, you may be able to save yourself time and money with the right questions to the potential client. You may find out early that the client has recently had a Foreclosure or filed Bankruptcy; perhaps they have no open lines of credit and all past accounts are delinquent; or you'll find out that they have never been late on anything and keep credit card balances very low. Certain questions will help you save money so that you don't have to run credit just yet and can still generate some 'basic numbers' for your client to consider using you. If you find out afterwards that they were not honest (and we know there are clients like that) then you help them get their credit in order and prepare them for homeownership at some point. Continue to follow-up, answer questions, and ensure they are staying the path to repairing their credit.
In my opinion, that is service we should provide without being compensated. Perhaps I do not see an issue because I do not run credit for every person that calls me. I have always felt comfortable assessing someone's credit range without pulling their credit based on questions I've asked and answers I've received. As you would figure, its not always 100% accurate but its a start and it saves me some time and money. In the end, if something is different than the client thinks, I share the report with them and we review areas we focus on further. We get them set up in a program to improve their scores and go from there.
Again, this is my opinion. If I were shopping for a home mortgage, I would not spend one dollar until I know for sure what I am applying for.
I do not judge any company that charges an upfront application fee. That is just not how I do business myself.