The Dollars and Cents Behind Refinancing

18th December 2013 : Chris Lee Law Firm

If you are like most people, your home is the most valuable financial asset you own. That’s why it is critical to understand the ins and outs of your mortgage and what refinancing could do for your finances and equity. There are a variety of reasons people consider refinancing, including low interest rates, an attempt to avoid foreclosure, or a desire for a new type of mortgage. But are you fully aware of the costs that go into refinancing your home? Below is a brief list of some of the potential costs associated with refinancing a mortgage.

Application and Loan Origination Fees

These are usually the first up-front fees you will pay when considering refinancing. An application fee covers processing and credit check costs. This can cost anywhere from $50-$300. The loan origination fee is paid as a percent of the loan principal and is charged by the lender when he/she prepares and evaluates your loan.

Points

When refinancing, you will likely be required to pay points. A point is equivalent to one percent of the remaining mortgage loan amount. These charges are fully negotiable with the lender, but usually range from 0% – 3% of the loan principal.

Appraisal and Inspection Fees

These two fees cover the appraisal and inspection of your home so that the lender can verify the value of your loan amount. Inspection fees will vary greatly depending on how much the lender and state requires. Lenders will often want a termite inspection, structural inspection, and even septic system and water tests. The appraisal and inspections combined usually cost anywhere from $300-$1500 when refinancing.

Attorney and Title Fees

Other fees you can expect to pay include attorney fees and title search fees. It is usually standard practice for the lender to charge you for closing costs due to the attorney. These can range from $500 to $1000. A title search will likely be conducted so the lender can verify you as the rightful owner, check for liens, and see things like previous foreclosures, ownership issues, and more.