Mortgage Application Fees - Do Not Pay Them

Mortgage and Lending with 214-728-0449 NMLS # 322646

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.

Posted by



Are you looking to purchase a Texas home?  Perhaps you love your Texas home but would be interested in refinancing your Texas mortgage to a lower interest rate?  

I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice.  If you are available to talk, I am available to listen.  Give me a call or visit my website for more details.

Do you want to know all of your mortgage options? Call me today and let's discuss them further.

Texas Home Loan Consultant

Always available for your Texas Mortgage and Home Loan needs!

John R Cannata    P#214.728.0449

NMLS # 322646

Texas Home Loan Expert

Frisco TX Mortgage



The views expressed on this site are mine alone and do not reflect the views of my employer.


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Fred Griffin, on leave of absence from ActiveRain
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

"save yourself time and money with the right questions to the potential client"

     That is good advice for both Mortgage Professionals and Real Estate Agents.

Mar 18, 2012 01:15 PM #1
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

John -

Thank you for sharing detailed quality information on mortgage application fees, do not pay them.

Mar 18, 2012 02:01 PM #2
Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

John  I agree with you completely - I will not refer a client to a loan officer with application fees

Mar 19, 2012 01:20 AM #3
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

John ... you're a stand-up guy and mortgage lender.  I've suggested this post.  As many as possible should read its message and your opinion.  And just looking at this issue from a business angle ... WHY would anyone want to charge so quickly?  In the short-term, yes .. you make an ap fee.  But eventually word is going to get around and that fact is going to start working against you, isn't it??  Rather like cutting your nose off to spite your face.  Just doesn't make solid business sense to continue on this course.

I agree with you strongly.  Buyers/clients need to get some preliminary numbers and work done, prior to shelling-out hard-earned money ...


Mar 19, 2012 02:07 AM #4
John Cannata
214-728-0449 - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Thank you Fred.

Do not pay them John.

Good way to steer your client Karen.

Thank you Gene. Thats what I think also, but some people just don't know they that dont need to pay the fee. There are people that can help them without it costing anything during the first stage. I've always seen it as 'buying their commitment with 'their' money'.

Mar 19, 2012 06:41 AM #5
Toronto, ON

Hi John - In Ontario, effective January 1, 2009, if your mortgage is for $300,000 or less, a mortgage brokerage cannot accept or require you to make an advance payment or deposit for any expenses or services that will be offered by the mortgage brokerage, one of its employees, mortgage agents or mortgage brokers.  You do not need to make any payment or deposit until you sign your mortgage agreement (for new mortgages) or enter into a new mortgage renewal agreement (for mortgage renewals). Prior to January 1, 2009, this rule applied to  mortgages of $200,000 or less.

Mar 19, 2012 08:20 AM #6
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY

I'm sure buyer's are going to appreciate this perspective, often I would think that they feel that they have to be the fee's to get the process going. 

Mar 19, 2012 08:30 AM #7
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

John: Good thoughts. Here we never charge anything unless the appraisal has been done. I have heard of application fees, etc. That's usually a bank thing and seems to negate any other supposed money they're saving the client. Thanks for the post!

Mar 19, 2012 08:58 AM #8
Mel Ahrens, MBA, Kelly Right Real Estate
Kelly Right Real Estate - Hood River, OR
Customized Choices for your Real Estate Needs

Very good advice. A lot of folks, especially first time buyers, don't know what fees are or are not appropriate. Good job enlightening them.


Mar 19, 2012 09:30 AM #9
Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

I believe we call these junk fees. I knew one loan officer that had a sheet that listed different junk fees to charge the client. Ugh

Mar 19, 2012 10:15 AM #10
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

yeah, well I judge them... greedy.  I have a list of lenders that don't charge.  I'm totally on board with the way you do business.  Sort of like the agent who offered to pay me to do a CMA for property she inherited because she really doesn't know if she's going to list it.  It's part of the cost of doing business... and I know she'd refer me.

Mar 19, 2012 10:33 AM #11
John Cannata
214-728-0449 - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Thanks for the comments and 'feature'!

Marc - We actually have something similar, but companies are working around it. I've never charged an upfront fee, so I never really paid close attention. The only out of pocket for us is the Appraisal that is ordered.

Morgan - There are fees, and the company will make their money if/when the loan closes. I just dont see a reason to charge some $95 or $195 for an 'application fee'. Even if its being applied towards the costs in the end, it still didnt cost $195 to do any work for this client yet.

Paul - I've always found it to be a way of making a client COMMITTED to you. Its hard for a buyer to go with another company after they just wrote a check to the first company. There is something about writing that check that makes it hard to shop for some reason.

Thank you Gretchen.

Harry - I see where you are going with that. True, it could be considered a 'junk fee'. I'm always careful about using that term just because many buyers think ALL fees are junk fees. As long as its justified, it makes sense. The bottom line is that ALL of the money is going somewhere. People will call it 'processing fee, underwriting fee, doc prep, etc'. Some lenders break it down differently than others. But in this situation, it would probably be called a junk fee.

Tammy -  exactly, its a part of doing business. We make money doing our job, but specifically for doing a one function. Our jobs are not broken down that way, as you know.

Mar 19, 2012 10:57 AM #12
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Nicely laid out my man ! Perfect timing with all the activity going on with buyers right now ! Congrats on a well deserved feature. Cheers JC !

Mar 19, 2012 11:08 AM #13
Michael S. Bolton
Michael S. Bolton,Inc. - Zimmerman, MN
MN Appraiser

Hi John, Well said! Sometimes you have give before you can get! Congrats on the feature!

Have an AWESOME day!


Mar 19, 2012 11:33 AM #14
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

John, surprised that some of the lenders do charge mortgage application fees! (I can run the numbers for

Mar 19, 2012 04:45 PM #15
John Cannata
214-728-0449 - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Thanks Sheldon. Its good to see you. You must be quite busy. :-)

I agree Michael. You'll get paid in the end after a good job.

Praful - Im surprised as well, but some companies just do business that way. Its up to them, its just not something our company does.

Mar 20, 2012 05:45 AM #16
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

John, this is some great advice. Good thing the people of Frisco, Texas have an honest mortgage guy to help them out! Keep up the great work, pal!

Mar 20, 2012 12:27 PM #17
John Cannata
214-728-0449 - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

I appreciate the kind words Eric.

Mar 21, 2012 06:09 AM #18
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