Home Mortgage Refinance Loan Costs
Â
Save Big Despite Home Refinancing Loan Costs
Homeowners are increasingly looking to refinance their current home mortgage loans in order to lock in lower interest rates. When you refinance your home loan, you take out a new loan that replaces the current loan. This refinanced loan allows you to get a better rate and can help lower your monthly mortgage costs. Borrowers generally look to a refinance loan option to take advantage of falling interest rates, get rid of lingering credit card debts, to make home repairs or improvements and to make use of the equity in their homes in the form of a cash back refinance loan.
No matter the type of refinance loan you’re looking into, a refinance loan is still a loan and there will be costs associated with refinancing your current home mortgage. Here are some of the more common refinance loan costs.
Credit reporting fees: Before a lender will refinance your home he will pull your credit report. Though your credit report was originally examined when you received your primary mortgage this is a new loan and possibly a new lender. The lender will use your credit report to review your history of paying bills on time and if you’re able to meet minimum payments and stay updated on all bills. Major changes since your original mortgage was obtained could have an effect on the interest rate that you qualify for. Talk to your lender about emergency situations or any other reasons that affected your ability to pay in the past.
Loan Discount Points or loan origination fees: These are paid upfront to avoid having to pay higher interest rates. One point is equal to one percent of the total borrowed amount. Most borrowers allow lenders the option of deciding whether or not to pay for discount points, typically the more discount points you pay the lower your interest rate will be.
Appraisal Fees: Before refinancing your home, your lender needs an estimate of the value of your home. An appraiser is usually hired to come out and inspect your home, though your lender may use other methods to find your home’s value.
Administration Fees: Both brokers and banks typically charge a fee for providing refinance loans to you. Banks set their own fees; brokers normally charge a fee of 1 to 1.5 percent of your loan amount. The bank usually pays this for the broker bringing your business to the bank.
Processing Fees: Someone had to take the time to arrange and gather all the loan documents needed for your home refinance and a fee will be needed to cover the cost.
Pre-payment Penalties: Penalties for paying your mortgage early may be part of your current mortgage agreement. If that is the case, the cost may be able to be covered with your refinancing loan or handled out of pocket by you.
These are only a few of the potential fees that you could be required to pay in refinance loan costs. Every mortgage lender is different. Other common fees include local taxes, notary services, attorney fees, inspection fees, mortgage insurance and escrow services. Some refinance loans are offered at no cost, though you may not pay anything up front, the lender typically rolls the cost over into your new home mortgage or they are recouped for a slightly higher interest rate. You may also choose to pay for the refinance loan costs through the use of investment, stocks or with money you’ve already saved up to keep monthly payments as low as possible.
Before deciding between no-cost and regular refinance loans find the difference between the monthly payments of the old loan and the refinanced loan, add in the fees to find the break even point. For example, your new loan offers you monthly savings of $150 and your loan fees add up to $3,000, in only 20 months you will have reached the break even point. If you plan to continue staying in your home for at least this long than there is no reason not to take advantage of refinancing loan options. Dinkytown offers a breakeven point refinance calculator that can help you find out how long it will take you to start saving money when you refinance your current home mortgage.
Loan refinance calculators can be used to help you determine refinance costs and how they impact your overall savings. Compare multiple refinance loan options to get the best deals. Ask lenders or brokers about all possible fees, as some fees are negotiable, but lenders won’t volunteer that information. You will need to ask for the information.
When you refinance your home, your interest rate decreases, but you may pay more over time. For most homeowners, this is reasonable since it allows them to lower high monthly payments that they can’t afford to make. If you have recently increased your annual salary consider refinancing your loan to shorten your loan term from 30 years to 15. Doing so would mean paying more per month but allow you to pay less in interest over the term of your loan and get rid of the debt much faster.
Home mortgage refinance loan costs don’t have to be unreasonable. Write down all the fees associated with refinancing your loan; speaking to several lenders and comparing fees can save you thousands. You may even want to consider a mortgage broker in this situation, as mortgage brokers work with several lenders at once to get you the best possible quote on your mortgage refinance. Read your loan agreement and address any questions or concerns you have. Check with your current mortgage lender first, since you have already completed the mortgage process with them. Some fees may be avoided and save you several hundred dollars on the cost of refinancing the loan. If you are willing to investigate your refinance loan costs you will be able to save more money over time.
Watch the video related to refinance loan mortgage
www.zfgmortgage.com – 918-459-6530 There has never been a better time to refinance your existing home or to purchase a new home. With record low interest rates and many devalued properties on the market, now is the time to take advantage of your good credit history. ZFG Mortgage is Tulsa’s premier mortgage lending company.
Help answer the question about refinance loan mortgage
Will getting a refinance mortgage loan help me save money?About Author
Home Refinancing Loan – Get expert help & advice with us to find the best mortgage rates for your home financing needs to fit every situation. Contact us now at 1.866.852.8363 & Apply now online for your lowest home purchase & refinancing home equity mortgage loans program.
Posted on January 20, 2009 | Under Finance Loan Mortgage | 6 Comments
Related Articles:- Best Home Loan Mortgage Rate Refinance
- Refinance your Mortgage to Shorten your Monthly Payments
- Colorado Mortgage Refinance Loans
- Keep Yourself Off The Breadline With The Best Refinance Home Mortgage Loan Rate
- Refinance Loans
Comments
6 Responses to “Home Mortgage Refinance Loan Costs”
Leave a Reply
Try this, Its good
http://mortgagerefinancingatlowrate.blogspot.com/
Yes, you have to pay closing costs REGARDLESS of what they tell you.
You'll either pay it in a rate hit, out-of-pocket, or they will roll it into the mortgage…but it will be there.
You will get a Good Faith Estimate and a TIL, just like you did with your original loan that will spell out the terms.
Here is the rule of thumb:
1. Make sure that you are beating your interest rate by a minimum of 1%.
3. Check for a prepayment penalty first.
3. Make sure that your monthly savings outpace the closing costs to 'recoop' in no more than 36 months, or it's not worth it.
For example, if your combined monthly payment is $1,000 per month, and your NEW mortgage payment will be $850 per month, and let's say your total closing costs are $3,000…you take the $3,000 and divide by the $150 per month savings…the figure that pops up on your calculator should be 36 or less.
Make sure you are also, planning on being in the home for longer than the number of months that pops up on the calculator…or else you have refinanced for nothing, and it's just money flushed down the toilet.
You are on the home stretch, you're just paying principle now. A refi of any kind does not make sense… UNLESS you NEED to do a refi to make the monthly payment lower. If that is the case, just bite the bullet and get the best deal you can. You could even look at getting a 30 year and just know you plan to pay it off in 10 or 15 years on your own. Ask for all your options.
jill
jt@firstmmc.com
I worked at a mortgage Company for 15 years and the rule of thumb is if you're not lowering your interest by at least 2% financially it isn't worth it Did the Loan Officer tell you what the difference, in dollars and cents, would decrease if you refinanced for a 1% lower interest rate. It's very little. What about discount fees if you have to pay 2% of the loan to get a !% lower interest rate you should stay where you are. You should figure out all the costs of refinancing, discount, origination fee, appraisal, credit report, job and bank account verifications, etc. It's always surprising to people that they have to start over and qualify for a new loan, but you do. Figure out how much it will cost you to refinance whether you add it to the loan or pay out of pocket. Then figure out how much you will save in lower monthly payments and see how long it would take to recoup what it cost to refinance against how much you will be saving in the lower payment amount. .Don't let anyone talk you into a refi to lower your interest by 1%……..it makes no financial sense.
You should be able to technically do this as long as the new home equity loan + the 1st mortgage are not more than 85% of the home's total value. This is generally the cap.
So if you have a home that's worth $200,000: 85% of that is 170,000. As long as the new home equity loan and the mortgage balance added together are less than that amount, you should be OK.
The highest LTV you're going to get on manufactured right now is about 90%, and that's even if you can find a bank to do it, because they've been avoiding manufactured like the Plague lately. Reason being is that property values are on a down trend, and the first properties to drop in value are mobile and manufactured homes.