How Much Does it Cost to Refinance a House?
Usually people refinance to lower their interest rate. However, people don't realize that there are several refinancing cost that are associated with doing so. This is a list of fees that can be associated with refinancing.
1. Mortgage Application Fee - This is a fee that the lender will charge you for taking your application, checking your credit score and other tasks associated with the application process. It may cost you $100 to $350.
2. Origination Fees - This is a percentage of the loan amount (not the purchase price) and usually is around 1% of your loan amount. For example if you take out a loan for $200,000 one point would be $2,000.
3. Attorney Fees - You may or may not have to pay attorney fees. That depends on the lender but if you do it could cost between $400 and $500.
4. Title Search and Insurance - This is the cost for the lender to make sure you own the property. Your lender will search at public record. This fee has a formula and it is $3.33 per $1000 for the first $50,000, $275 per $1000 for the next $50,000 and 2.20 for all over $100,000 plus 6% tax.
5. Prepayment Penalty - You may or may not have to pay this fee depending on the type of loan that you took out originally. You should check your loan documents and if you have to pay a prepayment fee associated with paying it off early it should state the amount of the fee in your loan document.
6. Appraisal Fee -You will need to pay an appraisal fee for the new loan. They want to see how much equity is in your current home and make sure it is worth your collateral price. This fee can cost you $350 to $400.
7. Other Refinancing Costs - You should always ask your lender what costs will be associated with your loan. They should provide you with a Good Faith Estimate to make you aware of any associated fees.