Non-refundable Lender Fee

Great question. As a general rule you should rarely if ever have to provide a non-refundable deposit. Usually if a lender wants a non-refundable deposit, especially if that deposit is of any size, then I would encourage you to consider walking away Now, if you are doing an SBA 7A loan, then the lender almost always requires a deposit once you have accepted a term sheet. Since there is substantial underwriting on SBA loans, they want confidence you plan to move forward. However, that fee should be refundable if the lender does not approve the loan and if the deal falls apart. If you ultimately decide to go elsewhere after they approve you, then you may have to forfeit that fee. That is part of the risk if you commit to move forward with an SBA 7A lender. However, from any other lender you will want to be sure the fee is refundable outside of third party costs the lender incurs.

Lender's will incur some third party costs in underwriting. Background checks, verification of tax returns via tax transcripts, credit reports, etc. Most lenders will remove those costs before refunding a fee. I do not typically recommend ordering third party reports before you have a final approval and have committed to move forward with a lender unless you are under time constraints or are very confident the loan will get approved and you intend to move forward.

I hope this helps. If you have additional questions I encourage you to email me at --@----.com Good luck with your search.

It’s common for conventional loans to have a deposit upon signing the term sheet. ~$10k to cover their legal fees, but depends on the size and complexity of the debt.