CandleFocus Glossary Editor
A loan application fee is a fee imposed on potential borrowers when they apply for a loan. The fee pays for the administrative costs associated with processing a loan application such as a mortgage. Common loan application fees are associated with mortgages, car loans, and personal loans, and the fee is typically nonrefundable even if a borrower is denied the loan.
Application fees are typically paid when you submit a loan application, and the amount varies widely among lenders. Some lenders, for example, may charge a fee of up to one percent of the loan amount sought.
Though some lenders impose application fees, it is important to note that other lenders have done away with application fees altogether, so it pays to shop around. In some cases, the money you save by shopping around may be in the thousands of dollars.
In addition, there are often options available to borrowers who do not have enough money saved up to pay an application fee. A borrower may be able to pay a portion of the fee, or the lender might consider allowing the fee to be paid over a few months or at closing. This can be especially helpful for first-time homebuyers who get stuck with a large upfront fee when they are budgeting for their purchase.
It is important to note that application fees are separate from other fees and charges associated with a loan, such as origination fees and closing costs. Applicants for a loan should always ask for a detailed breakdown of all the fees involved in their application. In addition, applicants should familiarize themselves with all the possible fees associated with a loan and have those discussed clearly with the lender prior to submitting their loan application.
To sum up, loan application fees are a necessary expense for potential borrowers but it pays to shop around to reduce them and avoid “garbage” fees that add to closing costs. Additionally, borrowers who cannot save for the fee should ask their lender for fee payment options. Ultimately, loan application fees should be examined thoroughly and compared to other lenders in order to secure the best loan deal.
Application fees are typically paid when you submit a loan application, and the amount varies widely among lenders. Some lenders, for example, may charge a fee of up to one percent of the loan amount sought.
Though some lenders impose application fees, it is important to note that other lenders have done away with application fees altogether, so it pays to shop around. In some cases, the money you save by shopping around may be in the thousands of dollars.
In addition, there are often options available to borrowers who do not have enough money saved up to pay an application fee. A borrower may be able to pay a portion of the fee, or the lender might consider allowing the fee to be paid over a few months or at closing. This can be especially helpful for first-time homebuyers who get stuck with a large upfront fee when they are budgeting for their purchase.
It is important to note that application fees are separate from other fees and charges associated with a loan, such as origination fees and closing costs. Applicants for a loan should always ask for a detailed breakdown of all the fees involved in their application. In addition, applicants should familiarize themselves with all the possible fees associated with a loan and have those discussed clearly with the lender prior to submitting their loan application.
To sum up, loan application fees are a necessary expense for potential borrowers but it pays to shop around to reduce them and avoid “garbage” fees that add to closing costs. Additionally, borrowers who cannot save for the fee should ask their lender for fee payment options. Ultimately, loan application fees should be examined thoroughly and compared to other lenders in order to secure the best loan deal.