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Homebuyers and Sellers Face Rising Junk Fees
Confirmed
In Short: Homebuyers and sellers are collectively paying nearly $2 billion annually in junk fees, according to new research.
Homebuyers and sellers are collectively paying nearly $2 billion annually in junk fees, according to new research from the Consumer Policy Center, which called that estimate conservative.
These fees, often charged at closing, are an immediate out-of-pocket expense that can be a financial burden for homebuyers who are barely able to cover their costs when they get the keys.
Kelly MacDonald, who recently bought a five-bedroom home in a Cincinnati suburb, exemplifies the impact of these fees.
MacDonald, who paid $445,000 for her new home, noted, "Had to work hard for it," while looking at her new front porch.
The fees come with various names and explanations, such as document storage fees and administrative fees, and are often a fraction of a percent of the total cost of buying a home.
However, these fees can still be a significant burden, especially for those barely able to afford a home.
Experts advise homebuyers to get preapproved by their lender before starting the home-buying process to secure a mortgage and understand their home-buying power.
What's confirmed
- Homebuyers and sellers are collectively paying nearly $2 billion annually in junk fees, according to new research from the Consumer Policy Center, which called that estimate conservative.
- These fees, often charged at closing, are an immediate out-of-pocket expense that can be a financial burden for homebuyers who are barely able to cover their costs when they get the keys.
- Kelly MacDonald, who recently bought a five-bedroom home in a Cincinnati suburb, exemplifies the impact of these fees.
- MacDonald, who paid $445,000 for her new home, noted, "Had to work hard for it," while looking at her new front porch.
- The fees come with various names and explanations, such as document storage fees and administrative fees, and are often a fraction of a percent of the total cost of buying a home.
- However, these fees can still be a significant burden, especially for those barely able to afford a home.
- Experts advise homebuyers to get preapproved by their lender before starting the home-buying process to secure a mortgage and understand their home-buying power.
What's still developing
- And while they have been around for decades, they are spreading, including now often being charged to both home buyers and sellers.
- "Consumers didn't really ask what it was for, or were told it was their cost," she adds.
- She met a real estate agent at a backyard party earlier this year ready to help.
- And soon, commenters had a warning for her: This is a junk fee.
- It also makes you a more serious buyer in the eyes of sellers, since it means a lender has already reviewed your finances and issued preliminary approval for a home loan.
- If you're serious about buying a home, get preapproved by your lender before you start house hunting so you can move quickly when you're ready to put in an offer.
- You might start with a prequalification in the early planning stages of looking for a home.
- If you're planning to buy a home, securing a mortgage preapproval is an important first step.