If you’re considering taking advantage of today’s low refinance mortgage rates from lenders like Amerisave and Wells Fargo Refinance, you’re probably concerned about the fees you’ll pay at closing. Closing cost you can expect to pay mortgage refinancing come from three sources: your lender, third parties, and taxes. It’s important to ensure the lender and third parties aren’t boosting their profits at your expense with unnecessary fees. These junk fees make recouping your closing costs difficult or even impossible; if you don’t break even on your out-of-pocket expenses you’re losing money no matter how low your refinance rates.
Here’s a rundown of some of the fees you can expect to encounter when mortgage refinancing:
Third Party Mortgage Refinancing Fees
Third party fees are charged by anyone other than the lender arranging your refi. These include fees for the appraisal, credit reports, title, attorney and the broker’s loan origination fee. There are no standards for third party fees and most are negotiable, especially the mortgage origination fee. Spend a little time haggling over these fees and you can literally save yourself hundreds, even a thousand dollars at closing.
You’ll want to pay close attention to that loan origination fee. This is the fee charged by the person or company arranging mortgage refinancing and a reasonable amount to pay is one percent of your loan amount, not a penny more.
What about taxes? Property taxes are assessed by your State and should not vary from one lender to the next, unless someone makes a mistake. It’s worth checking; however, you should find consistency when it comes to mortgage taxes across lenders.
Mortgage Lender Fees
These are fees your lender charges to refinance your home loan. One important fee to keep an eye out for is the points. Discount points are a fee you pay to buy down your mortgage rate. Many lenders use discount points to make their loan offers seem more attractive; however, buried in the fine print is the fee you’ll have to pay to get that rate. The way discount points work is you pay one percent of your loan amount to reduce your mortgage refinance rate by one percent. One point is equal to one percent of your loan amount, two points is two percent and so on.
Lender junk fees are fees found on your Good Faith Estimate that do nothing but boost their profits at your expense. Junk fees include loan application fees, rate lock fees and processing fees. Mortgage junk fees are negotiable and can vary from one lender to the next.
You can learn more about paying less for your next home loan by avoiding unnecessary fees and markup by checking out my free Underground Mortgage Videos.