Warning Signs Your Mortgage Lender Is Overcharging You

By Josh Painter

Josh Painter is a coach, philanthropist, and the author of the book Best Version Ever.

Mortgages can be confusing, and some lenders count on that. High fees, unexplained charges, and shifting rates can quickly turn a good offer into a costly mistake. The solution is simple: understand how to spot when a lender is overcharging you before you sign on the dotted line.

If you want to make sure you’re not paying more than you should, here are four warning signs to watch for:

1. When the origination fee is too high. Origination fees are normal, but they shouldn’t exceed one percent of your loan without a clear reason. If your lender can’t explain the charge or just calls it “standard,” that’s a red flag. A higher fee is only justified if it lowers your rate or covers a complex loan. Otherwise, you’re likely overpaying.

2. A big gap between the interest rate and the APR. The interest rate reflects the cost of borrowing, while the APR (Annual Percentage Rate) includes that rate plus fees and closing costs. If your APR is much higher than your interest rate, you’re likely paying heavy upfront costs. Comparing APRs across lenders is one of the quickest ways to spot hidden fees and see the true cost of a loan.

3. Vague or redundant fees on your estimate. Be cautious when you see generic terms like “processing,” “doc prep,” or “admin fee.” These often signal unnecessary markups. Some lenders pile on multiple small “junk fees” to increase profit without adding real value.

If your loan estimate lists several small charges that add up quickly, ask what each one covers and compare with other lenders. A quote packed with vague fees is a sign you’re likely overpaying.

4. When the rate you were quoted suddenly changes. Few things are more frustrating than seeing your rate increase after being quoted something lower. Some lenders lure borrowers with low initial rates, then raise them later. While market shifts can cause changes, your lender should clearly explain why. If they can’t or their answer feels vague, pause the process. A trustworthy lender will always be transparent.

You don’t need to be a mortgage expert to avoid overpaying. Review your loan estimate carefully, compare offers, and ask questions until everything makes sense. If something feels off, trust your instincts. A good lender will be transparent and ready to explain.

If you’d like a professional review of your estimate or need help understanding the fees, feel free to reach out to me via phone or email for a free, no-obligation consultation. I’m here to help.