How to Pay Less Refinance Closing Costs

Refinance closing costs are going down as much as 7% nationwide according to one lender’s recent survey. Mortgage rates are still at historically low levels making the most important aspect of refinancing (that you control) the fees you pay. Here are several tips to help you pay less refinance closing costs and get the best deal on your next home loan.

How Much Are Typical Refinance Closing Costs?

The mortgage fees you pay and how much depends on where you’re living and what kind of home loan you choose. Every mortgage loan has fees and refinancing is no exception. There are so-called no fee refinance offers out there but you’ll always be trading higher mortgage rates for the lender paying your loan origination fee and other closing costs.

The survey I mentioned claims that on average closing costs are down 7% from the previous year nationwide. It’s worth noting that the same survey had closing costs up 37% the year before thanks to new government regulation.

How much you end up paying when all is said and done depends on the state you live in along with the amount of your loan. If you live in a high-cost state like New York, California, or Maryland you can expect to pay more at closing than someone in Missouri which had the lowest average closing costs.

Some states like Florida levy a tax on all mortgage transactions driving up cost. Here are the top 5 most expensive states when it comes to refinance closing costs:

  1. New York where closing averages $5,435
  2. Texas where closing averages $4,619
  3. Pennsylvania where closing averages $4,467
  4. Florida, closing averages $4,395
  5. Oklahoma where closing averages $4,352

Which states have the lowest closing costs?

  1. Missouri where closing only averages $3,006
  2. Kansas, averaging $3,193
  3. Colorado where closing averages $3,193
  4. Iowa, averaging $3,257
  5. Arkansas where closing averages $3,325

Across the country refinance closing costs average $3,750, just shy of 2% of the home loan amount. Most brokers quote an outdated “rule of thumb” that closing costs should be 1.50%. There isn’t a state in the Union that came in close to 1.5% in the last survey.

How to Pay Less Refinance Closing Costs

The good news is that some of the mortgage fees you pay when refinancing are negotiable. The most commonly overpaid refinance closing costs include the loan origination fee and discount points, all negotiable. Loan origination is the fee paid to the person or company arranging your loan. I’ve seen origination fees as low as $400 with community credit unions or as high as 2%.

The less you pay for loan origination the better off you’ll be. If you don’t have cash to pay the originator you could accept a higher mortgage rate in exchange for the lender paying all or part of your closing costs. Don’t be afraid to haggle with potential brokers and lenders over loan origination.

Suppose for example you’re being quoted 30-year fixed refinance rates at 4.0%. In Texas the refinance closing costs for this mortgage average $4,619. You could accept slightly higher refinance rates at 4.25% and pay zero closing costs. On a $250,000 mortgage the difference in your monthly payment is $36.31.

Which is the better choice? It depends on what you’re already paying and how much longer it’s going to take you to break even recouping your out-of pocket mortgage refinancing expenses. If you’re unable to break even because of a higher payment amount or term length you’re going to be losing money, no matter what your interest rate.

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You can learn more about paying less refinance closing costs with today’s best mortgage lenders by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Underground Mortgage Videos
Here’s a quick sample to get you started paying less refinance closing costs and getting more…

Closing Costs for Refinancing a Mortgage

The most common homeowner mistake is overpaying closing costs for refinancing a mortgage. Did you know that lender and broker fees are negotiable and vary widely from one company to the next? Spend a little time comparison shopping and haggling with prospective brokers over fees and you can literally save yourself thousands of dollars when mortgage refinancing. Here are several tips for you refi to help you pay less closing costs for refinancing a mortgage loan.

Reasonable Closing Costs for Refinancing a Mortgage

How much can you reasonably expect to pay closing on your mortgage refi? What fees are necessary and which ones are simply garbage? The difference can make or break your mortgage refinance because you’ll have to recoup these out-of-pocket expenses before benefiting from your new home loan. The more you pay, including lender junk fees, the longer it’s going to break even on your closing costs.

How much should you pay? One area most of your neighbors overpay for their mortgage refinance is the loan origination fee. This is paid to the mortgage broker or company for arranging your new home loan. One percent for loan origination is perfectly reasonable; however, many brokers try to charge double, if not more for their services. Despite what they tell you there’s nothing magical about the work your mortgage broker does; if the person you’re working with isn’t willing to negotiate their fee simply move on to the next broker.

Beware Mortgage Lender Junk Fees

A dishonest mortgage broker/lender will try to boost their profits at your expense by including unnecessary fees in your closing costs for refinancing a mortgage. These junk fees include the application fee, processing fee, broker courier fee, and any refinance rate lock fee. If the broker you’re working with quotes you a fee for locking your interest rate this is a sure sign that you’re working with a dishonest person as no lender in the United States charges a fee for locking in their lowest refinance rates.

Good Faith Estimate vs. HUD-1 Settlement Statement

Should you trust the Good Faith Estimate (GFE) provided by your lender and what about that Annual Percentage Rate? When it comes to shopping for the best refinance rates the Good Faith Estimate and Annual Percentage Rate (APR) are less than worthless for comparing home loan offers. The problem with APR is that there is no standard for lenders to follow when calculating as to which fees they’re required to include in the calculation. The APR is based on an estimate given in “good faith” (get it, Good Faith Estimate) that has become little more than a marketing tool for lenders to sell overpriced home loans. When it comes to fees the last word is on your HUD-1 Settlement Statement, not on the GFE.

The Ultimate Guide to Paying Less For Your Next Home Loan

There is a method for shopping for the best mortgage quotes when refinancing that gets you today’s lowest refinance rates while avoiding junk fees and lender markup. Focus your energy on finding the right person to arrange your refi instead of comparing those Good Faith Estimates into the wee hours of the morning and you can save yourself thousands of dollars and hours of frustration.

Click Here to Get Started

You can learn more about paying less for mortgage refinancing while avoiding unnecessary fees and other common mortgage mistakes by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Free Underground Mortgage Videos

Here’s a quick sample to get you started saving thousands on closing costs for refinancing a mortgage.

Current Mortgage Interest Rate Without Hidden Markup

Are you searching for the lowest current mortgage interest rate for your next home loan? Are you worried that hidden markup and junk fees could result in overpaying thousands of dollars every year? Did you know that according to the Secretary of Housing and Urban Development your friends and neighbors are overpaying sixteen billion dollars this year alone? Here are several of my best tips to help you find the lowest current mortgage interest rate without throwing money way on your mortgage broker’s BS or lender junk fees.

Current Mortgage Interest Rate Online

Mortgage quotes are easy to find online; every Tom, Dick, & Harry with a mortgage website will give you a “free” quote without obligation. (Before you call me a hypocrite, yes it’s true…so will my site; however, the difference is that I’m going to show you how see through all the hidden markup and junk fees your neighbors fell for…)

What is this hidden markup I’m going on about? That’s the point isn’t it? …It’s hidden. If it wasn’t hidden your neighbors wouldn’t be throwing away an average of $1200 a year thanks to lender paid compensation known as Yield Spread Premium. What is Yield Spread Premium? Simply put, your mortgage lender pays any broker that locks and closes your home loan with a higher than necessary current mortgage interest rate a kickback known to the mortgage fat cats as Yield Spread Premium.

Why You Need to Avoid Mortgage Yield Spread Premium

Here’s an example to illustrate the problem with this hidden markup of your current mortgage interest rate. Suppose for example you’re refinancing your home and the broker quotes you a current mortgage interest rate of 6.75% on a $315,000 home loan. The broker charges you a mortgage origination fee of 1.5 percent for their work arranging your home loan and brags about the deal they’re getting you.

What the broker isn’t telling you is that you could have had that lender’s lowest current mortgage interest rate of 6.0%; however, this person marked it up to collect a commission from the lender of 3.0% of your home loan amount. This is paid in addition to the point and a half you’re already overpaying the broker for their origination fee.

What the big deal about an extra .75 percent when mortgage refinancing? Your monthly payment on a 30 year, fixed rate home loan at 6.5% will be $2,043 per month. If you had the current mortgage interest rate you deserve at 6.0% your payment will only be $1,888 per month! That’s a difference of $155 per month, a whopping $1,860 per year! Don’t fall for the same trap your neighbors did when mortgage refinancing.

It is possible to pay a flat origination fee of 1.0% of your loan amount and refinance with a wholesale mortgage rate keeping that $1,860 in your pocket for the things that really matter. You don’t have to have a mortgage broker cousin or be a personal finance guru to get a current mortgage interest rate that doesn’t include this hidden markup…you just need to know how to go about it.

You can learn more about mortgage refinancing with wholesale rates without paying junk fees by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c

Here’s a quick sample to get you started on the path to taking back $1,860 per year on your next home loan…mortgage broker be dammed!

Bank Refi Pitfalls to Avoid

If you’re considering a bank refi for your next mortgage there are several things you need to know about bank refi loans that could cost you thousands of dollars in hidden fees and markup. This hidden markup of your bank refi drives up your payments by $1200 a year or more! Here are several of my best mortgage refinancing tips to help avoid paying too much for your next home loan, even when considering a bank refi.

Bank Refi Secrets

The number one problem with bank refi lons that you might not know about is that your lender is exempt from laws that protect homeowners in the United States from predatory lending practices. That’s right; your bank is exempt from the Real Estate Settlement Procedures Act (RESPA) which requires mortgage brokers and lenders to disclose their profit margin and markup of your home loan. In the 1990s the Banking Lobby in the United States spent millions of dollars “lobbying” lawmakers to have RESPA changed to exclude banks and credit unions. They succeeded and as a result your bank is not required to disclose any of their markup or profit margin from your bank refi loan. You’ll get little more than an Annual Percentage Rate and Good Faith Estimate to base your decision for taking the bank refi loan.

The Problem with Annual Percentage Rate

The problem with the bank refi Annual Percentage Rate (APR) is that it is based on a Good Faith Estimate. Mortgage lenders routinely low-ball the figures on Good Faith Estimates to make their loan offers more attractive. After all, it’s just an estimate given in “good faith” right? As an educated consumer, you know what that’s worth in today’s marketplace. Another problem with Annual Percentage Rate is that while Truth-in-Lending laws require lenders to provide you with their APR there is no standard for how that APR is calculated or accountability for what it contains. The Annual Percentage Rate from one lender to the next may not include all of the costs or fees associated with locking and closing the bank refi loan. This makes it impossible to make apples-to-apples comparisons of bank refi loans when shopping for the lowest mortgage rates and fees.

Because the Annual Percentage Rate is based on a Good Faith Estimate for which here is no standard or accountability among lenders it is all but worthless for basing your decision when it comes to taking out a bank refi loan.

This is why I recommend avoiding bank refi loans completely…why would you ever considering doing business with any lender that doesn’t have to play by the rules? You see how angry people get about all of the shady dealings and kickbacks when it comes to the health care industry, if people only knew about all of the dirty dealings the Banking Lobby is responsible for they would be outraged.

What your lender doesn’t want you to know about bank refi loans is that the majority of their profits comes from selling home loans with higher than necessary mortgage rates to investors on the secondary market. Profit made this way is known to the industry as Service Release Premium. The bank knows what wholesale mortgage rates are and what you could get if only you knew better; however, they mark up your bank refi rates to collect this premium profit known as Service Release Premium.

Mortgage Broker Banks

Bank refi loans are a sure way to overpay for your home loan. When the Real Estate Settlement Procedures Act changed a number of brokers and other mortgage companies restructured their business to take advantage of the loophole. These individuals operate what are known as mortgage broker banks, meaning that they fund home loans with their own cash. By doing this, they are not required to disclose any more and overcharge homeowners like your neighbors in the same manner. How can you spot a broker bank? Ask the person arranging your home loan if they lock and close in the name of the wholesale lender or in the name of their own company. If they close in their company’s name, you know they’re operating as a broker bank, and the only reason for doing this is to take advantage of their customers. This is the direct mortgage lender lie, they want you to think that by cutting out the middleman you’re saving money, but it’s really only done to overcharge you.

You can learn more about bank refi home loans and avoiding junk fees that cost you thousands of dollars per year by checking out my free Underground Mortgage Refinancing Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c

Here’s a quick sample to get you started that exposes another kind of hidden markup used by mortgage brokers to double, even triple their commissions at your expense.