I was going to take out a loan from my bank to refinance my home. The bank called me and asked me to send my bank account statement, proof of income, proof of house insurance, and two bank statements. They then called me back twenty minutes later and said that I was approved. They wanted me to pay $350 with my credit card to lock it in. Is this legitimate? Do I really pay before I even get the loan?
The fee that you are paying is not a loan payment, but a fee, perhaps even nonrefundable, for you to lock in today's interest rate. If rates are on the rise, this can be money well spent. It is common. They should have better explained to you what it was for, however. You may want to ask them exactly what the benefits are for you.
Some lenders will also charge application fees. These may also be nonrefundable and are meant to compensate the lender for the initial work starting the loan. This fee weeds out many of the inquisitive people who don't go through with their loan requests, but cause a lot of work for the lender with no intention of really borrowing money.
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