Junk Fees
Categories: Banking
Buying a house is expensive. And we’re not just talking about the price of the house itself. We’re talking about all the other expenses we have to pay, like inspection costs and broker fees. And what’s even worse is when we’re closing the mortgage with our lender, and all of a sudden there are a bunch of extra fees we didn’t expect tacked onto the bottom line.
“What the what?” we ask. “What are all these fees?”
They're what are known as “junk fees,” and they tend to earn a big frowny-face from everyone on the receiving end of them. These fees are often excessive, and are sometimes a complete sham. Some of the names they might go by include “document fee,” “administrative storage fee,” “application processing addendum fee,” etc. They’ll often show up at the last minute, totally unexpected and totally unwanted (like that weird neighbor who always crashes our BBQs), and the only purpose they serve is netting more cash for the mortgage lender.
Now, don’t get us wrong—some fees are legit. But if we’re happily signing all the dotted lines that come with buying a house, and we see a bunch of questionable fee charges, we shouldn’t be afraid to speak up. We have the right to contest those charges; they aren’t illegal, but if we fight them, there’s a decent chance we could get them reduced, or even removed altogether. And that would definitely turn any frown upside-down.
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Finance: What is Compensation: Advisory ...2 Views
Finance a la shmoop what are advisory fee limits? well they're basically a
price ceiling above which financial advisors can't go yeah I can't go they [Financial advisors in an elevator and hit price ceiling]
can't touch that ceiling you know like hammer time, can't touch this...
so when you invest in a mutual fund you pay two fees there's a commission
and there's an annual management fee usually based on the assets you have
with them under management like maybe it's one percent on the first hundred [Asset rises]
grand that you have and then half a percent above a million or whatever
but there is a third and insidious fee element in the world called advisory
fees like how do you choose which fund to buy well if you have a financial
advisor they'll walk you through the lists of mutual funds out there and [Ice cream flavors appear]
index funds and all other set of funds as well well they're like a gazillion of
them and then that advisor will charge you for their time in some form right
someone's got to pay for their beach house well if you start adding up all
the fees you're paying for arguably no better performance than had you just [Itemized list of fees appear]
logged onto schwab.com or fidelity.com and bought an index fund hmm
well then you're gonna start to pause here it starts to be a big number in
those fees that eat meaningfully into your investment returns most buyers of [Pacman fees eating up money]
mutual funds are not financial gurus yeah not like that they're doctors and
lawyers and plumbing parts distributors and they really don't have a
sophisticated understanding of just how badly they could get taken by
unscrupulous financial advisors so the industry placed a series of structured
limits to keep the non gurus safe from the financial predators when it comes to
compensation and fee limits you know on advisory services and predators like [Tiger walking by]
this guy