Upfront Fees for a Loan

[Shah Alam]

Hi,

I am new to the US, so I am just understanding hard private lending. Is it common practice for a lender to ask for upfront fees for providing a loan to a borrower? If so, what sorts of fees are they and what do they cover? Or should I avoid anyone asking for fees upfront to provide a loan?

[Linda Weygant]

The lender should provide you with a document that outlines exactly what the fees are for.  The fees should be for reimbursements of their costs, not just a fee.

So acceptable fees would be for an Appraisal and a Credit Check.  Unacceptable fees would be "application fees" "prepaid points" or anything that doesn't look applicable to them actually engaging with others for services.

A Due Diligence Fee is complete and total BS.  Their job is to do due diligence and is part of their fees when they close on the loan.  You should not need to pay them up front to do their own job.