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I can remember being bombarded by mortgage refinancing offers from lenders during the boom. Many said they would waive their fees to get a deal.
Now, slowly, the solicitations are starting to trickle back. But now the fees are non-refundable. So if you apply for a refinancing and change your mind, you are out the application fee.
I recently got a solicitation from Chase offering a “0 point, $0 Chase fee loan at an aggressive rate.” Two sentences later it said: “There will be a $750 non-refundable application fee that is applied toward your appraisal at closing.” Hmm, $750 is more than an appraisal costs. What happened to that “0 Chase fee part?”
We recently considered doing a refinancing with Wells Fargo. They wanted a $500 non-refundable fee. There’s always pressure when you are refinancing to make a decision on the day you do your cost/benefit calculations, so the math won’t turn against you if interest rates move. That’s why the non-refundable part of this can be a problem for borrowers who change their minds.
Not every lender is doing this. Mitch Ohlbaum, a mortgage broker at Legend Mortgage in Los Angeles, tells me many lenders, such as Bank of America, are just asking for the appraisal fee up front but not an application fee.