• Mortgage Discharge Fees Can Be Expensive

    When we are helping our clients to consolidate debt or even purchase a home, sometimes due to circumstances such as bad credit we have no choice but to use a private lender. One of the reasons why we don’t like using private lenders are the mortgage discharge fees. There are a lot of other reasons as well.

    Some Of The Disadvantages Of Using A Private Lender

    Private lenders are not as strictly regulated as institutional lenders. It’s a kind of “free for all” which makes it even more important to have somebody in your corner; a mortgage broker that you can trust.

    Private lenders generally have higher rates than institutional lenders. They will often charge lender fees when setting up the mortgage. Mortgage brokers, since they do not get paid as they do from institutional lenders, will often charge a brokerage fee in these cases. The appraisal and legal fees are pretty common across-the-board regardless if it’s an institutional lender or a private lender. An often overlooked aspect of private lending are the mortgage discharge fees.

    An Example Of Mortgage Discharge Fees

    Here is a recent example of the mortgage discharge fees that were charged to our clients as we moved them from a private lender to an institutional lender, which is our primary goal.

    • Discharge fee: $500
    • Admin fee: $350
    • Insurance inquiry fee: $350
    • Payout statement: $350

    As you can see, these mortgage discharge fees add up very quickly and you may also notice that they are very exaggerated and redundant. For example, the payout statement is a piece of paper that tells you how much you owe them. In other words, they are charging $350 for a letter. If that’s the charge for the letter, then what is the actual discharge fee that they are charging? What is the admin fee? Nobody knows, and it is well within their right to charge these fees.

    This is why we avoid private lending as much as possible and wherever possible for our clients. We will warn our clients in advance, and we will only use private lenders when there is no other option.

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