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The Cost of Refinancing

April 10, 2013 |  Article By :   | 

mortgage appWith the low interest rates many homeowners are still thinking about refinancing to lower their monthly mortgage payments.  While this seems like a great idea, there are some things to consider before you embark on this path.  Refinancing is not cheap – have you looked into what it will cost you? How long will you be staying in your current home? If you are moving soon, you most likely won’t recoup the cost of the refinancing.  Does your current mortgage have a pre-payment fee?  To get the exact costs of refinancing please check with your mortgage banker but I have a short list of some of the costs that you will need to consider.

  • An application fee, as high as $300, which is non-refundable if you change your mind or are denied
  • The loan origination fee which can be up to 1.5% of the loan principal
  • Appraisal cost which usually runs $300-$700
  • Closing fees which can be as high as $1000
  • Title search and insurance which can also be up to $1000
  • You may need a survey which typically runs several hundred dollars
  • If your current mortgage has a prepayment penalty, you will have to cover that as well and it can be anywhere from 1-6 months of interest payments

Refinancing is a wonderful idea with the low interest rates but you do need to find out the costs and see if it is worth your while or not.

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