A mortgage processing fee is not a junk fee most of the time. It is an actual service performed by either an employee of the mortgage company or an outsourced mortgage processing company.

It should cost between $300 and $500 and is part of your closing costs. You will see it on the Good Faith Estimate and settlement statement or closing statement. If the processing fee is going to the mortgage company, that means the processor works for the mortgage company. If the fee is going to a different company other than the mortgage company, that means the processing is outsourced.

Mortgage Processing Fee Definition

Mortgage processing involves gathering all the information from the mortgage loan officer and you, checking every number on every document to verify accuracy, submitting all documents to the underwriters specifications, clearing all other conditions needed by underwriting, coordinating closing with underwriting and title, and keeping you and the loan officer abreast of the events.

Mortgage processing starts after you sign the application and continues until the closing and funding. The loan processing time period should not take more than 30 days to complete.

After you sign the initial application, you will probably be dealing with the processor until closing. The loan officer may get involved again if there is a problem or the terms of your mortgage have changed.

Mortgage processing fees are legitimate mortgage settlement fees as long as it is in the $300 to $500 range. Anything above that may be considered a junk fee.

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