Garbage Fees

AAA

DEFINITION of 'Garbage Fees'

Unnecessary fees tacked onto mortgage closing costs by lenders to pad the lender's profit. Garbage fees may have names such as "administrative fee", "application fee", appraisal review fee", "courier fee", "document preparation fee", "document review fee","loan origination fee" and "settlement fee". These charges are usually either blatantly illegitimate or are typical costs of business but either way, they are dramatically exaggerated before being passed on to the customer.

INVESTOPEDIA EXPLAINS 'Garbage Fees'

Although some people see garbage fees as a necessary evil in the financing or refinancing of a home purchase, it is often possible for borrowers to get lenders to reduce or eliminate these bogus fees by speaking up and expressing an unwillingness to pay them. The best time to do this is before signing a good faith estimate.

RELATED TERMS
  1. Income Property Mortgage

    A loan given to an investor to purchase a residential or commercial ...
  2. Junk Fees

    Nebulous charges assessed at the closing of a mortgage that go ...
  3. Bank Fees

    Many banks charge nominal fees for various services, such as ...
  4. Mortgage Broker

    An intermediary who brings mortgage borrowers and mortgage lenders ...
  5. Closing Costs

    The expenses, over and above the price of the property that buyers ...
  6. Origination Points

    A type of fee borrowers pay to lenders or loan officers in order ...
Related Articles
  1. Mortgage Points: What's The Point?
    Credit & Loans

    Mortgage Points: What's The Point?

  2. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  3. Mortgages: How Much Can You Afford?
    Budgeting

    Mortgages: How Much Can You Afford?

  4. Understanding The Mortgage Payment Structure
    Credit & Loans

    Understanding The Mortgage Payment Structure

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center