Closing Costs – Who Pays and How Much? Part 5: Junk Fees.
A junk fee is a cost of doing business that a company tries to shift to you. Most originate from two sources: lenders and escrow companies. Look for them on the loan estimate, closing disclosure and settlement statement. Loan related junk fees may be called application fees, lock fees, processing fees, doc prep fees, admin fees, credit report fees, and underwriting fees. Escrow fees that may be junk include courier fees, delivery fees, notary and wire transfer fees; these same names may be also used by lenders to hide their junk. Some junk fees can be lowered or eliminated entirely, so try to negotiate them. Note that sometimes legitimate fees have the same names as junk ones, so ask the loan officer or escrow agent to explain to you what each fee is and why it is necessary.