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A Consumer's Guide to Mortgage Refinancing
What Are the Costs of Refinancing?
(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.
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* 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 may be higher or lower than the ranges indicated below.
- Application Fee $75 to $300
- Appraisal Fee $150 to $400
- Survey Costs $125 to $300
- Homeowner's Hazard Insurance $300 to $600
- Lender's Attorney's Review Fees $75 to $200
- Title Search and Title Insurance $450 to $600
- Home Inspection Fees $175 to $350
- Loan Origination Fees 1% of loan Mortgage Insurance 0.5% to 1.0% Points 1% to 3%
* Lender's Attorney's Review Fees. The lender will usually charge you for fees paid to the lawyer or company that conducts the closing for the lender. Settlements are conducted by lending institutions, title insurance companies, escrow companies, real estate brokers, and attorneys for the buyer and seller. In most situations, the person conducting the settlement is providing a service to the lender. You may also be required to pay for other legal services relating to your loan which are provided to the lender. You may want to retain your own attorney to represent you at all stages of the transaction including settlement.
* Loan Origination Fees and Points. The origination fee is charged for the lenders work in evaluating and preparing your mortgage loan. Points are prepaid finance charges imposed by the lender at closing to increase the lender's yield beyond the stated interest rate on the mortgage note. One point equals one percent of the loan amount. For example, one point on a $75,000 loan would be $750. In some cases, the points you pay can be financed by adding them to the loan amount. The total number of points a lender charges will depend on market conditions and the interest rate to be charged.
* Appraisal Fee. This fee pays for an appraisal which is a supportable and defensible estimate or opinion of the value of the property.
* Prepayment Penalty. A prepayment penalty on your present mortgage could be the greatest deterrent to refinancing. The practice of charging money for an early pay-off of the existing mortgage loan varies by state, type of lender, and type of loan. Prepayment penalties are forbidden on various loans including loans from federally chartered credit unions, FHA and VA loans, and some other home-purchase loans. The mortgage documents for your existing loan will state if there is a penalty for prepayment. In some loans, you may be charged interest for the full month in which you prepay your loan.
* Miscellaneous. Depending on the type of loan you have and other factors, another major expense you might face is the fee for a VA loan guarantee, FHA mortgage insurance, or private mortgage insurance. There are a few other closing costs in addition to these.
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_________________________________ Table of Contents Would refinancing be worth it? What are the costs of refinancing?
Source:
Federal Reserve Board
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