Should I pay a mortgage application fee if I cancel before any approval or commitment?

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Should I pay a mortgage application fee if I cancel before any approval or commitment?

I did cancel my mortgage application with a financial company. Before I did I had already paid for the appraisal  of $555.55. Now they want $453 more or they going to send me to collection to destroy my credit score; then no other bank its going to approve my loan. Is this legal?

Asked on April 10, 2011 under General Practice, New Jersey

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

There is no general or universal answer: instead, this depends *entirely* on (1) the terms of the application and (2) exactly when and how you canceled. For example, it is perfectly legal for a mortgage application to include a nonrefundable application fee which  becomes due as soon as the applicant signs or executes the application. You need to therefore look to the application and other similar documents and see what liability you incurred for the fee and match that to your situation. Note though that fees must be disclosed, so if there was no notice that you would be incurring a fee, in that case, you might not be liable for it. Good luck.


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