If you’re searching for the best refinance rates for your next home loan and want to minimize your closing costs by avoiding unnecessary fees you’ve come to the right place. Personal finance blog FinWeb defines the closing costs you’re likely to encounter on your next mortgage refi.
The typical closing costs on a mortgage will include several different fees. Costs typically include things such as the credit reporting fee, the appraisal fee, the loan application and/or origination fee, title search and insurance fees, legal fees associated with the home purchase (for states that require an attorney), inspections, transfer fees, escrow fees and points.
There are a number of junk fees you’re likely to encounter when shopping for mortgage loans from even the best refinance company; however, there are common mortgage mistakes that come from not paying the right fees.
Minimizing the closing costs on your mortgage refi can only be a good thing with one exception. Recent changes to the laws regulating mortgage broker compensation prohibit brokers from charging you a loan origination fee and accepting yield spread premium (YSP) from the lender. YSP is the fee your lender pays your broker for locking and closing your home loan with a higher than necessary interest rate. Under the new rules the broker can accept compensation from the lender or charge you a loan origination fee, but not both.
Not paying the origination fee when mortgage refinancing means you’re not getting the best refinance rates for your next home loan and that your payment will be higher than it needs to be. You can learn more about avoiding junk fees and markup on your next home loan by checking out my free Underground Mortgage Refinancing Videos.