Refinancing can save you thousands, especially if you have
several years left on your mortgage. However, you can also
choose to refinance simply to tap into your home's equity or
reduce your monthly payments.
"How much will it cost?" is a common question for homeowners
considering refinancing their mortgage. While costs vary between
lenders and loan amounts, the following will give you some
guidelines to help you compare financing companies and their
offers.
New Home Loan Fees
When you refinance, you are getting a new loan and paying for
all those fees again. Fees, including application fee, appraisal
fee, survey costs, attorney review fee, title search, and home
inspection, will usually add up to around $1000 and $2000. That
is in addition to the loan origination fee, usually 1%, and any
additional points.
Some lenders offer zero point loans and low refinancing costs
but with higher interest rates. These types of financing
packages make sense if you are concerned about initial costs and
are willing to spend more over the course of your loan.
Loan Points
Each point equals 1% of the loan, which is due at the loan's
signing. So a point on a $100,000 loan would be $1,000. Besides
the loan's origination fee of 1% or more, you can also purchase
lower interest rates with points. If you plan to stay in your
home for over seven years, then you can probably save money with
lower interest payments.
Locate Lower Costs
You can also sometimes locate a lower cost for your mortgage by
comparing companies. The easiest way to do this is to request
quotes online to compare interest rates and fees.
You can also sometimes negotiate a lower interest rate or
closing cost with your original mortgage company. It helps if
you can tell them that you have found a better offer with
another lender. But sometimes other lenders will have the better
deal.
Different Loan Terms
A shorter loan term or a fixed rate mortgage can also save on
long term interest costs. By picking a 15 year term loan, you
can nearly cut your interest costs in half. You can also protect
yourself from rising interest rates with an adjustable rate
mortgage by converting to a fixed rate mortgage.
|
