Mortgage Fees to Avoid

Q: DEAR BOB: Which home mortgage fees are proper for a lender to charge borrowers? I recall you said some fees are unnecessary and should be avoided. -- Stephen O.

A: DEAR STEPHEN: Mortgage lenders seem to work 24 hours a day, seven days a week, to create new names for unnecessary fees to impose on borrowers who have no clue when they are being ripped off. However, there are many honest mortgage lenders who won't try to impose unexpected last-minute fees.

I suggest you start shopping among at least a half-dozen mortgage lenders for a no-cost, no-fee home loan. In today's mortgage market with rising interest rates, I recommend obtaining a fixed-rate mortgage. However, if you are certain you won't keep your home more than five years, then an adjustable-rate mortgage fixed for five years can save you some money on interest. Be certain the loan does not contain a prepayment penalty or negative amortization, where the interest rate adjusts monthly or semi-annually and unpaid interest is added to your loan balance.

If you are dealing with a direct lender, such as Wells Fargo, Bank of America or Countrywide, the lender's good faith estimate must reveal all loan charges. You might be asked to pay legitimate fees to third parties, such as for the appraisal, credit report and lender's title insurance fee.

However, if you are dealing with a middleman, such as a mortgage broker, his written good-faith estimate might be less reliable. That's because the broker often says, "I got you the best mortgage, but the lender imposed these unexpected fees at the last minute. Take it or leave it."

Unnecessary fees often have creative names, such as underwriting fee, document preparation fee, loan-review fee, warehousing fee or loan-origination fee.

If the lender asks you to pay a loan fee of 1 or 2 percent of the amount borrowed, usually called points, ask how much reduction you will receive in the loan's interest rate. For each one point loan fee paid, you should receive at least a one-eighth percent reduction in your loan's interest rate for the life of the mortgage. Pay a loan fee only if you expect to stay in the house at least 10 years. Otherwise, take the no-cost, no-fee mortgage with all lender charges included in the interest rate.

DEAR BOB: My widowed mother died recently and the lawyer who prepared her trust wants to charge an outlandish fee just to fill out the death papers for the court for her small estate. Is it possible I could file the papers myself with the court? Where do I obtain them? -- Eugene B.

DEAR EUGENE: If your mother left her major assets in a revocable living trust, as I recommend, no probate court proceedings are required. However, if she left a will with a testamentary or irrevocable trust, then probate court proceedings are usually required. This is not a do-it-yourself project.

Shop around among probate lawyers. Although state law sets the maximum probate attorney fees allowed, based on the gross value of the deceased's estate, most probate lawyers will "adjust" their fees downward if you ask, unless there are lots of complications or a will contest involving the heirs.

DEAR BOB: We phoned our neighbor to ask him to quiet his barking dog and stop running his tractor and spewing carbon monoxide near my disabled daughter's room. In response, he built a tall fence. I live on a lake and had a nice view from my kitchen window for 28 years. The neighbor has lived next door for 17 years, but the couple is now divorcing. What chance do I have to either remove part of the fence that blocks my lake view or cut it down by two feet? He moved out but still owns the house. The wife seems amenable to being reasonable. What recourse do I have? -- Elly W.

DEAR ELLY: Unless your city or county has a view protection ordinance, you have no legal right to a view. However, if the neighbor's tall fence is defined by local ordinance as a "spite fence," usually six feet or taller built without a required building permit, you may have a legal right to have the fence removed. For details, check with a estate lawyer.