by Jim Gallagher
St. Louis Post-Dispatch Q: You wrote that we should use $800 as a rough guide on closing costs when we consider refinancing our mortgage. I received an offer for a loan with no points but $3,063 in closing costs. So, am I getting gouged with unnecessary charges?--B. W.
A: Gouged? You're being ripped off, hornswoggled, bamboozled and flimflammed. The list of closing costs you sent me contains some doozies.
The lenders say they're giving you a no-points mortgage, but they're not. They're charging you a $1,250 origination fee on your $130,000 mortgage. That's about a point.
The lenders might be playing a semantics game. Because they're not calling it a discount point, they can say it's not a point. But an origination fee amounts to the same thing.
Next, they're piling on junk fees. These are big charges for nearly nothing. You would be paying $770 in underwriting and processing fees. All lenders add a little junk. It's part of their profit. But anything more than $200 to $250 is high, says Chris Reichert, executive vice president at Pulaski Bank, the second-largest mortgage lender in St. Louis.
The courier and delivery fees of $90 are howlers, too. Are they delivering your papers from China?
You wouldn't mind paying higher closing costs if the lenders could get you a good interest rate. But the rate they offered was about average for a mortgage with one point on the date you wrote your letter last month.
Consider yourself smart. You questioned the fees.
I got a call last week from a woman who paid a $4,000 broker fee to refinance an $86,000 mortgage. The broker added his fee to the amount of her loan. The woman didn't realize it until long after the closing.
That's sleazy. The lesson: Read your mortgage papers carefully.
(Distributed by Scripps Howard News Service. E-mail Jim Gallagher at jimgallagher@post-dispatch.com.)
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