Refinancing your home mortgage appears to be a great concept, particularly in the event that you are able to get a much lower rate of interest or tap in your home’s equity for money. But realize that just like your initial home loan, there are costs associated with a refinance. Lending Tree quotes you’ll spend, on average, anywhere from 3% to 6 percent of the principal of your loan in closing costs, based on your geographical area.
Appraisal
When you bought your home, chances are you had it assessed. It is a requirement to find out the market value of the home and whether the loan you secured was covered by the home’s value. Well, if you refinance, your home will almost certainly have to be assessed again, and at your cost. Lending Tree quotes appraisal prices at $225 to $450.
Fees
Three of the most common fees in a refinance would be the program fee, the loan-origination fee along with the home inspection commission. The program fee is that the money you pay to get your application processed, which the Home Buying Institute estimates to be $75 to $300. The loan-origination fee is one of those murky provisions, but it basically involves the amount of work your creditor puts into assess your loan application and prepare it to the underwriter. This fee is about 1 percent of what you’re financing. Your home may or may not need to be inspected, based on the requirements of your creditor. But if your home has to be inspected, expect to pay $175 to $350, based on Lending Tree.
Credit Report
The credit report fee occasionally is rolled into the program or loan-origination fees. However, in any event, your lender will probably charge to pull your credit report to determine your worthiness for the loan. This charge is small. The Home Buying Institute estimates that the cost at $15 to $30.
Title Search
Most lenders will not use the name search which was conducted through the initial sale of your home when doing a refinance. They will usually go to the cost –or rather you will–of ordering a brand new one. The name search assesses the property’s history to confirm legal ownership and locate some claims against the property, such as a lien from a previous owner. According to Lending Tree, this fee could be $450 to $600 and usually includes title insurance. Title insurance covers you against losses brought on by discrepancies in the title or contrary to challenges to your ownership due to problems like fraud, forgery and probate problems.
Legal Fees
You probably did not hire a lawyer to look on your refinance paperwork until you signed it. No problem. Your creditor did and passed the cost on to you. Your lender’s lawyer looked on the paperwork to be certain everything adheres to present lending standards and accepted the closing paperwork to the creditor. This cost is usually $75 to $200.
Other Prices
If the lender needs a survey of this home, you’ll be billed $125 to $300 for this support. If you live near a flood zone, then your creditor may require a decision of whether you need flood insurance. This test can cost approximately $20. If your creditor needed a courier to receive your paperwork to you, this cost could be passed on to you and run up to $30.