Mortgage Refinancing costs are an important aspect of comparison shopping for the best mortgage loan. You can expect to pay many of the same expenses when refinancing as you did when purchasing your home. By carefully comparison shopping from a variety of lenders you can minimize your mortgage refinancing costs. Here are several tips to help you recognize fair mortgage refinancing costs when comparison shopping for the best loan.
When comparing mortgage refinancing costs it is important to use the Good Faith Estimate as the Annual Percentage Rate does not give you enough information to make an informed decision. Mortgage lenders are required to give you the Good Faith Estimate outlining your mortgage refinancing costs within three days of receiving your application; however, you can request the document before applying simply by asking for it. Once you have the Good Faith Estimates of mortgage refinancing costs, here are several items you need to focus on.
Mortgage Refinancing Costs: Loan Origination Fees
Make sure the loan origination fee listed on your Good Faith Estimate is not greater than 1-1.5% of your loan amount for a home you will occupy. Origination fees for investment properties you will not occupy are typically higher and you can expect to pay 2-2.5% of the loan amount for an investment loan. This fee may be called an “origination fee,” “mortgage broker fee,” “discount points,” or a combination of these terms.
Mortgage Refinancing Costs: Loan Processing Fees
This fee is often paid to a third party processing company. Regardless of who gets it, the loan processing fee should not be higher than $400. Loan processing fees vary widely from one lender to the next; however, anything greater than $400 is considered excessive. If a mortgage company is charging more than this amount ask them why the fee is so high. If they will not change it scratch that mortgage company off your list.
Mortgage Refinancing Costs: Beware Junk Fees
Carefully review all the mortgage refinancing costs found on your Good Faith Statement. You are looking for anything that resembles an application fee, lock fee, submission fee, administration fee, or a courier fee. These are simply junk fees and you should refuse to pay them. If a lender will not negotiate on theses unnecessary junk fees you should scratch that lender off your list.
You can learn more about comparing mortgage refinancing costs and avoiding common mistakes by registering for a free mortgage tutorial on Mortgage Refinancing Costs.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
