What Are the Costs of Refinancing?
Here’s what you can expect to pay when you refinance: The 3-6 Percent Rule Plan to pay between 3% and 6% of the amount of the new loan amount (if want cash-out, the loan amount will be larger). Yet some lenders offer no-cost refinancing in exchange for a higher rate. Getting to the Points Points play a big part in how much it’ll cost to refinance – the more points you pay, the lower your interest rate. Points are a good idea if you’re planning to stay in your home for a while, but if you’ll be moving soon you should try to avoid paying points altogether. Negotiate the Fees Be aggressive and investigate the fees your lender is asking you to pay. You may not need an appraisal, or your loan-to-value may be such that you no longer need Private Mortgage Insurance. Sometimes if you refinance with your current lender they won’t need a credit report. With a little research it’s amazing how much you can save. Here, we’ve explained the different loan refinancing fees.
(These fees can vary; and may not be charged by all lenders; shop for the best fees and rates) The fees described below are the charges that you are most likely to encounter in a refinancing. * Application Fee. This charge imposed by your lender covers the initial costs of processing your loan request and checking your credit report. * Title Search and Title Insurance. This charge will cover the cost of examining the public record to confirm ownership of the real estate. It also covers the cost of a policy, usually issued by a title insurance company, that insures the policy holder in a specific amount for any loss caused by discrepancies in the title to the property. Be sure to ask the company carrying the present policy if it can re-issue your policy at a re-issue rate. You could save up to 70 percent of what it would cost you for a new policy. Because costs may vary significantly from area to area and from lender to lender, the following are estimates only. Your actual closing costs
The 3-6 Percent Rule Plan to pay between 3% and 6% of the amount of the new loan amount (if want cash-out, the loan amount will be larger). Here, we’ve explained the different loan refinancing fees. Application Fee: This covers the initial costs of processing your loan application and checking your credit. Appraisal Fee: An appraisal provides an estimate or opinion of your property’s value. Title Search and Title Insurance: A Title Search examines the public record to discover if any other party claims ownership of the property. Title Insurance covers you if any discrepancies arise in ownership. (A reissue of the title can save 70% over the cost of a new policy.) Lender’s Attorney’s Review Fees: In any financial transaction of this scope, a lawyer’s participation ensures that the lender isn’t legally vulnerable. Loan Origination Fees: This is the cost of evaluating and preparing a mortgage loan. Points: These are basically finance charges you pay the lender. One point equals 1% of the
Since costs may vary widely depending on the price of your house, your geographical location, and the lender you’ve chosen use the following are estimates. Some fees may be waived in certain situations just be sure that you’ve asked all the questions up front, so that you know all the costs going in. • Appraisal Fee: $150 to $400 • Title Search and Title Insurance: $450 to $600 • Mortgage Insurance: 0.5 percent to 1 percent (could be needed, depending on how much equity you have in the home) • Points: 1 percent to 3 percent (Remember that points are nothing more than pre-paid interest, so you should only be paying points if the lender will discount the interest rate.) • Prepayment Penalty: This could become the greatest single deterrent to refinancing. If it is large enough, this penalty could offset the savings you gain by refinancing in the first place. Prepayment penalties are forbidden on certain loans such as FHA and VA loans. Your current mortgage documents will indicate whether
Here’s what you can expect to pay when you refinance: The 3-6 Percent Rule Plan to pay between 3% and 6% of the amount of the new loan amount (if want cash-out, the loan amount will be larger). Yet some lenders offer no-cost refinancing in exchange for a higher rate. Getting to the Points Points play a big part in how much it’ll cost to refinance – the more points you pay, the lower your interest rate. Points are a good idea if you’re planning to stay in your home for a while, but if you’ll be moving soon you should try to avoid paying points altogether. Negotiate the Fees Be aggressive and investigate the fees your lender is asking you to pay. You may not need an appraisal, or your loan-to-value may be such that you no longer need Private Mortgage Insurance. Sometimes if you refinance with your current lender they won’t need a credit report. With a little research it’s amazing how much you can save. Here, we’ve explained the different loan refinancing fees.
