Refinancing Costs

Refinancing your mortgage, incurs many of the same costs and charges that you encountered when first taking out the loan. Therell be an application fee levied by the lender to cover your loan request, and the cost of getting your credit report. You'll also have to pay for a title search to confirm the legal owner of the property, as well as title insurance, which will cover a specific amount of costs that may be accrued in solving any discrepancies in the title. However, if the company who presently holds that policy will renew it, you can save up to 70%.

Your Closing Costs

Don't forget that in order to close a mortgage, there is a long list of associated expenses.

• What the lender will want: application fees, mortgage insurance, points, lawyer's costs, loan origin fee
   
• What expenses are related to the property: survey cost, homeowner and title insurance, home inspection fee, title search

Lender Expenses

You can expect your lender to require you pay for certain expenses and charges, including:

• Attorney's fees:
  
  These will be the fees charge by the legal representative who handles the closure for the lending institution. Other companies or brokers may render the service. It need not be a lawyer. However, you may wish to have a lawyer represent your interests in the negotiations.
• Points and loan origin fees:
  
  Points are the percentage, usually 1-3% of the loan amount, which is charged by the lender to increase their yield over the interest rate. In some cases, the points are added into the loan. The origin fee is for the preparation and evaluation work that went into your loan.
   
• Prepayment penalty:
  
  This can be the largest consideration in refinancing. Any prepayment penalty on your present mortgage, should be listed in the papers, so that you can use that information in making a decision. Such penalties are not permitted on certain types of loans including: loans from the VA, FHA, and some federally chartered credit unions.

When you add them up, a homeowner can expect to pay anywhere from three to six percent of the unpaid principle, in refinancing costs. That's in addition to prepayment penalties and clearing any second mortgages that may have been added. However, there are ways to save. Although you may shop around other lenders, check with your current one to see if the mortgage closing work is still considered relevant. This can spare you the repeated expense of such things as surveys, ownership searches, and more.