The Hidden Costs Of Home Refinancing

By | April 18, 2013

Mortgage refinancing costs and fees will be different depending on the homeowners financial situation and the type of loan they want. With interest rates so low right now, many homeowners can benefit from getting a mortgage refinanced into a new loan with better interest rates, terms, or conditions. However, getting a home loan refinancing does cost money. Sometimes, the costs can overwhelm the savings, and make a refinance pointless. Here are some common costs that are involved with a typical mortgage refinancing. For more information see Visit  NPBS.

Mortgage Lender or Bank Fees

There will be a fee charged by the mortgage lender or bank to facilitate the loan. These fees are for document preparation, administrative costs, processing, and loan underwriting. Almost ever lender and bank charge these fees, so they are not unusual. These fees can cost as much as $900, sometimes more. The places that advertise “no cost” mortgage refinancing may not charge these fees, but they will come at a price somewhere throughout the process. Typically in the form of higher interest rates, or other “costs” that they claim to have no control of.

Home Appraisal

When refinancing a mortgage a homeowner will generally need to pay for an appraiser to inspect the home. These appraisals are required by most banks or lenders in order to ensure that they are not financing a worthless property should things go wrong. If your home does not have a recent appraisal, especially in a turbulent housing market, a recent one will be required. This can cost upwards of $400 for a typical single family home. Sometimes, investment property appraisals can cost a little more and also require a operating income statement.

Title and Escrow Fees

These costs are to ensure that the owner of said property, is truly the owner. Not some middleman, tenant, or con artist. Many times a mortgage is owned by not who you pay money to, but their parent company or similar. Sometimes, the true owner of the home loan is buried behind several different corporation names. The title fee covers that aspect, and ensures all parties involved are honest and aware. The escrow fee is simply the cost of having a third, uninvolved party oversee the process to ensure someones interests do not cause dishonesty. Their also may be express mailing and courier fees involved with this as documents get passed along in a timely fashion to all involved parties.

These are the most common costs associated with a home loan refinance. The cost of mortgage refinancing will be different amount depending on factors that include credit worthiness, home value, loan amount, interest rates, and the lender or bank that is used. Generally, the worse the credit rating is, the more expensive the process becomes as lenders need to do more work to find an appropriate deal that will be accepted by a bank. While these costs may be too much for some people, in general, they can be overcome by the savings on a proper mortgage refinancing. The best thing homeowners can do to ensure they pay the least amount possible is shop around and compare costs from a number of different lenders and banks.

 

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