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Added fees can be tricky for homeowners refinancing

August 4, 2010 8:56:16 PM PDT
With today's rock bottom mortgage rates, many homeowners can save money by refinancing their homes. But they need to watch out for added fees.

The fees banks charge can eat up a lot of the savings you get with a lower interest rate. There are appraisal fees, application fees, credit report fees, it goes on and on. However, many banks are waiving fees to attract customers -- or at least they say they are.

Mike McCoy never thought about refinancing his home until the day he received a tempting offer from his lender. Chase Bank said he could save a bundle.

"I could reduce my house payment by $250 a month, in addition we'll waive the origination fee, appraisal fee; I said, 'Great, I should do that,'" McCoy said.

Chase said McCoy could save more than $2,900 per year in mortgage payments. Not only that, the bank would waive up to $1,000 worth of the usual fees, including no appraisal fee. That clinched it.

"Your whole decision of making a refi is what the closing costs will be," McCoy said.

So he went ahead with the deal and Chase did grant him a reduced 5 percent interest rate. McCoy was indeed saving $250 per month. There was just one problem; McCoy was charged a $407 appraisal fee, the fee that was supposed to be waived.

"It was the principal of telling me no appraisal fee, and then have the audacity to put it in writing," McCoy said.

McCoy e-mailed the bank officer demanding his $407 back. The officer apologized and promised to fix it. However, the charge stuck.

"They said, 'Oh there's a lender credit in there of $395, that's your appraisal fee.' I said, 'No, that was the application fee,'" McCoy said.

This all dragged on for months until McCoy contacted 7 On Your Side, who called Chase Bank and the bank looked into the case. Within days, McCoy received a letter of apology.

The bank said simply, "After we were made aware of the error, we waived the fees for Mr. McCoy."

One footnote: McCoy says he noticed the fee because he went over many pages of documents before signing off -- always a good idea whenever you get into a new loan.


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