Refinancing can be expensive! And the monthly savings gained from lowering your monthly payments may not exceed the costs. Lender/broker fees include charges for document preparation, underwriting and origination, while third-party fees include charges for title searches, flood certifications, appraisals and the like. Government fees include recording taxes and other charges assessed by local and state agencies. Typical costs associated with refinancing may include:
- Appraisal fee ($300 to $700).
- Loan origination fee (up to 1.5 percent of the loan amount). This charge is to evaluate and prepare the loan documents.
- Commitment fee ($150- $500)
- Processing ($500 – $1,500)
- Attorney review and closing fee ($500 to $1,000). The borrower may get charged for the lawyer who conducts the closing for the lender.
- Title search and insurance ($700 to $900). This will cover the cost of searching the property’s records to make sure that the borrower is the rightful owner and to ensure there are no liens against the property.
- Postage/courier ($35 – $100)
- Survey fee ($200 to $500). This fee may be waived if the survey of the land and buildings is available and no changes to the property’s footprint have occurred since the survey was done. (Your present servicer is likely to have a copy of your last survey in your loan file).
- State Specific charges, for example, Florida has an Intangible Tax charge of 20¢ per $100 plus Documentary Stamps charge of 35¢ per $100 of the mortgage amount.
What about a no-closing-cost mortgage or no-closing-cost refinance:
A mortgage isn’t free – while your existing servicer may be able to refinance you for less – there are fees associated with getting the loan. Those closing costs usually total thousands of dollars.
Besides writing a check to pay those fees at the closing table, there’s another way to pay them when you get a mortgage or refinance your existing one: by adding them to the loan amount. The result is called a no-closing-cost mortgage or no-closing-cost refinance. However, you’ll probably have to accept a higher interest rate over the life of the loan.
Adjustments Related to Your Interest Rate: Depending on the particular mortgage rate you choose, you will most likely either receive a borrower credit from the lender (which decreases your total mortgage closing costs) or be required to buy down points (which increase your total mortgage closing costs in exchange for a lower interest rate).
Borrower Credit: A credit that may be offered to you by the lender for choosing a particular interest rate. The higher the interest rate, the more borrower credit you will receive from the lender, thereby decreasing your total closing costs.
Buy Down Points: An additional cost that may be added for choosing a particular interest rate. If you want to lower your interest rate even more, you will have to buy down more points, thereby increasing your total closing costs.
If your existing mortgage rate is lower than what’s available today and you are looking for additional cash for home improvements, pay off high-interest rate credit cards or consolidate debt – consider a home equity loan.
NOTE: The Refinance Estimator below is provided by aboutMYmortgage.com, LLC (AMM) and is for informational and directional purposes only. Actual mortgage data can be obtained by talking directly with your mortgage servicer. AMM provides the Excel workbook and the included data it contains “as is,” and you use this at your own risk. AMM makes no warranties as to performance, merchantability, fitness for a particular purpose, or any other warranties whether expressed or implied. No oral or written communication from or information provided by AMM shall create a warranty. Under no circumstances shall AMM be liable for direct, indirect, special, incidental, or consequential damages resulting from the use, misuse, or inability to use this Excel workbook and the included data, even if AMM has been advised of the possibility of such damages.
