Are Loan Application Fees Refundable?

Is it possible to get back a loan application charge if I back out of the loan before much is done?

1 Answer

You should check with your lender, but typically no, application fees are non-refundable. This will be lender specific,  but normally what you will find is that the application fee is money that the lender is using to pay for the appraisal. Since an appraiser wants to be paid for the appraisals that they complete, the lender pays them from the application fee from your loan.

Your loan package should have some information on the application, explaining their policy on refunds. What you will normally find is that, paying the application fee and starting a loan is your commitment towards doing the loan. Once you do that, many people get involved in the application, the appraiser, the title company who needs to perform a title search, the loan officer and their processors, underwriters, etc all begin working on an application. If the loan doesn't close, most of these people are not paid at all. The application fee helps offset some of the cost of starting a loan, as well as covering the appraisal fee.

Ultimately speak with your loan officer or the bank or broker you applied with, you stand a better chance at a refund if the lender hasn't done anything yet (if they haven't ordered an appraisal or title work or shipped a file to processing). If these services have been performed, someone has to pay for them, and normally you will not receive a refund of your application fee. There is probably a signed document in your application package stating that you are paying the app fee and that it is non-refundable, but it is worth asking if you haven't progressed far into the application process.