Another lender will cover my appraisal fees
Fee coverage claims when mortgage shopping. Know how lenders use this tactic to compete for your business.
What You'll Learn in This Chapter
- Why lenders cast doubt on competitor fee coverage offers instead of competing
- How to verify whether fee coverage is genuine or offset by higher rates or loan amounts
- Scripts to compare total loan costs across all lenders using written Loan Estimates
You mention to a lender that another lender is offering to cover your appraisal fee. Instead of competing with their own offer, the lender responds: "Are you sure they're really covering those fees, or are they just rolling them into your loan amount or increasing your interest rate?"
But, here's what's really happening...
"Nothing Is Truly Free" is a doubt-creation tactic designed to undermine competitive offers without making a counteroffer. The loan officer's process is to question the legitimacy of competitor incentives, hoping you'll discount the other offer or ask the competitor for extensive justification, creating friction in your shopping process.
As a shopper, your counter-process is to compare standardized written Loan Estimates, which are required to show all fees, all credits, and the net cash to close. Loan Estimates make it impossible to hide costs—if a lender covers a $500 appraisal fee, it shows as a credit. If they offset it with a higher rate or increased fees, that shows too. When lenders create doubt instead of competing, they're revealing they don't have a better offer.
Now that you understand the tactic, let's look at how most people fall into the trap.
➡ How People Get Trapped
Most people respond with:
You're right, I should ask them about that. Maybe it's not as good as it sounds.
Don't do that.
When you let one lender cast doubt on another lender's offer without written proof, you've allowed them to compete on rhetoric instead of reality. The truth is on the Loan Estimate: If fees are covered, they show as lender credits. If the rate is higher to compensate, that shows too. By second-guessing legitimate offers based on vague warnings, you're doing the doubtful lender's work for them.
Compare documents, not suspicions.
➡ What You Should Say Instead
I appreciate your perspective on fee coverage. I'd like to get written Loan Estimates from all lenders to compare the total costs, including any fees that are covered or waived. Can you provide me with a written Loan Estimate that shows all costs clearly?
Here's why this is the right approach:
- Redirects from verbal doubt to written documentation
- Recognizes that Loan Estimates are standardized and must show all credits, fees, and net costs
- Forces the doubtful lender to compete with their own written offer instead of attacking others
- Allows you to verify fee coverage claims by comparing actual documents, not assumptions
The script dismisses doubt-creation as noise and insists on comparing standardized written offers.
➡ See The Mortgage Script in Action
➡ Key Takeaway
Loan Estimates show all fees, all credits, and net costs in a standardized format. If a lender questions a competitor's fee coverage, demand written Loan Estimates from both and compare the numbers yourself.
Related Mortgage Resources
Mortgage Calculator
Calculate whether lower fees with a higher rate saves you money over time.
Add An Extra Lender
Get Loan Estimates showing all fees, credits, and total costs side-by-side.
Refinance Breakeven Calculator
Calculate how long it takes to recover higher closing costs with a better rate.
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