Articles & Tips
The Costs of Mortgage Refinancing
More and more homeowners are turning to refinancing today to lock in low interest rates and tap into a ready source of existing cash to pay bills, invest in remodeling, or make a large purchase. While many homeowners can save a lot of money by refinancing an existing mortgage, most are largely unaware of the mortgage refinancing costs they could encounter. This list offers a look at just a few of the mortgage refinancing costs you might encounter when you decide to refinance your existing mortgage.
- Application fee. This is a fee that is charged by the lender to cover the administrative costs associated with reviewing and processing your mortgage application. Costs typically range from $50 to $650 dollars.
- Appraisal fee. Lenders order an appraisal to determine the actual value of your property, and use that value to determine the amount of your mortgage and some of its fees. Most borrowers can expect to pay from $250 to $500 for the appraisal fee.
- Title insurance fee. This fee is one of the most variable, ranging anywhere from $200 to $900, and sometimes more, depending upon the cost and location of the property. Title insurance guarantees that the lender is the only entity with a lien against the property, and can ensure that you own the property free and clear.
- Loan origination fees. These fees are charged to cover the costs of actually preparing your loan and its documents, and usually range from about $2,000 to $3,000, depending on your down payment.
- Loan points. Points are usually assessed to decrease the interest rate you will be charged on your loan. Each point is equal to 1 percent of the cost of the mortgage. Some lenders do not charge points while others may charge 3 points or, in rare cases, more. When you refinance, you often can add the cost of the points into the total amount of your mortgage.
- Lender fees. These are variable, from a few hundred to more than a thousand dollars, and can include administrative fees as well as other costs associated with writing your loan and closing on it.
To determine the actual mortgage refinancing costs of your loan and whether or not you will actually save money by refinancing, take the time to add up the fees and costs associated with the loan. To make the task easier, look online for websites that offer calculators designed to do the work for you. By keeping an eye on mortgage refinancing costs, you can ensure you make the right financial move for your needs.
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