Closing costs are often padded with junk fees

One of the most expensive things that people will do in their lives is purchase a home. It’s an expense that will usually drag out for as long as thirty years. While it is expensive to buy a home, it is not common to buy a home. Most people only do so a few times in their lives, as as such, they are often unfamiliar with the process, which can be rather complicated even under the best of conditions.

The home buying process involves both legal and financial documents, and most consumers are unfamiliar with either one. This can lead to a common problem that turns up at closing time - padded closing costs.

Closing costs are fees that are added to the loan to take care of miscellaneous expenses that are tied to the loan. Courier fees, photocopying fees, appraisal fees, taxes and similar levies are often added to the cost of the loan, along with any fees that are paid to the lender in exchange for reducing the interest rate. Unfortunately, many lenders take advantage of the borrower’s relative lack of knowledge to add some additional charges to the loan that amount to nothing more than extra profit for the lender.

Unlike legitimate charges, padded fees often have vague, nebulous names, such as “administrative fee” or “processing fee.” No one really knows what they are; they are simply added on to the bottom line and the buyer is expected to pay them. On a typical mortgage, these “fees” can add up to hundreds or even thousands of dollars extra.