The Costs of Refinancing

One of the most asked questions regarding refinance is “How much are the closing costs?”. Well it’s not that easy of an answer to give if we do not know what type of loan and how much your borrowing. So let’s break it down for you.

The cost of refinancing should be measured against your new monthly savings or the overall savings due to a shorter loan term, such as reducing the term of a 30 year fixed rate mortgage loan to a 20 or 15 year fixed rate mortgage loan.

Title insurance breaks down in two parts, a lenders policy and the owner’s policy. The cost for title insurance is very competitive and there is very little difference from company to company. When refinancing you can give your old title policy to the closing attorney and receive a credit towards your new policy.

Underwriting fees vary from lender to lender but are generally between $750 to $1800 depending on the size and complexity of the mortgage loan.

Processing fees can be from a lender’s in house processing team or a contract company. Costs generally are fixed and are usually between $795 and $1,100. The processor’s job is to align and coordinate all the paperwork in an orderly manner from the client, closing company and insurance company in presentation to the underwriter. Once the underwriter releases the conditions the processors chases down all the conditions needed to close. Once the underwriter has verified all the conditions have been satisfied the processor will coordinate the closing package with the closing company to ensure your paperwork is correct.

Document ‘prep’ fees can be charged by the lender and or closing company. The fee varies depending on the type of loan and complexity of the loan. Fees typically range from $90 to upwards of $500.

Government fees include but are not limited to Recording fees, intangible taxes, and document stamps. Some of these fees are fixed price per county and some are percent based on state rates.

Title company’s or Closing attorney’s have their expenses too and the cost varies depending on how much work is needed to be done with title searches and lien pay offs.

Loan origination fees; in short can be offset by adjusted loan origination charges and or yield spread premiums. This is similar to a banks “service release premium”. The difference between mortgage broker /lenders and banks are Banks do not have to disclose their service release premium while mortgage brokers / lenders do.

Mortgage loan funding fees are associated with certain types of loans; such as FHA, VA and USDA. These are percentage base fees and are part of your closing cost.

Other costs which may be included are the cost for Surveys, Appraisals, Credit, fund wiring and over carrier fees.

If you have any questions or would like further assistance please contact us directly and we will try our very best to help wherever possible.

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