Sunday, May 30, 2010

Watch Out For Refinancing Costs and Fees

Refinancing your home can often help ease the burdens of interest you currently pay but you must also be aware and recognize all of the refinancing costs that could put you out in the short-term. When working to refinance your home, it should be thought of as starting from square one meaning refinancing costs will be similar to those when first buying the home. All appraisals, inspections, and loan applications will still be required meaning you must pick up these as part of your refinance costs.
When preparing to refinance there are several things that will determine the overall refinancing cost. First you must take into consideration:

  • The length of time you have spent in your home : This will be important when lenders view your past record of payment, ability to stay on time and up to date, and some lenders even place guidelines on how long you must be in the home before refinancing.
  • The remaining balance on your original mortgage : The typical rule of thumb is the higher your remaining balance the higher the refinance cost will be. This is due to fees, penalties, and interest amounts.
  • The value of your home in today's real estate market : This will be one of the key elements to determining your refinancing costs as it changes very quickly and could be much higher or much lower than the original price.
After going over your current loan status you will be required to pick up the costs that are involved in the initial home buying process. Some of these costs and fees include:
  • Licensed Appraisal Fee: $250 - $600
  • Loan Application Fee: $75 - $300
  • Land Survey Fees: $124 - $300
  • Attorneys Fees: $75.00 - $200.00
  • Title Search & insurance $400.00 - $600.00
  • House Inspector: $175.00 - $350.00
The final steps to determining the refinance costs will include the additional costs involved with most refinancing such as:
  • Early Payoff Penalties and Fines : Many, if not most, mortgage companies set in a place fees for paying your mortgage off early. This will be your burden and will have to be paid before moving any further in the process.
  • Remaining Balance Costs : Some mortgages will not pay your interest amount off for you, leaving it as another amount to add to your refinance cost.
  • Homeowners Insurance : If your homeowners insurance will be added into your monthly payment it will typically not be a part of your refinancing costs but for those paying annually it will need to be taken care of.
One thing to keep in mind when exploring the option of refinancing is that the final refinancing costs will be determined by each individual situation with the list outlined above only serving as a general idea. Each area, lender, and market will represent different policies with unique fees. While refinancing costs are well worth it in the long run, some may find the refinancing costs due up front are not in their budget. Regardless, it is important that you investigate all of your options before signing any binding documents.


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