Refinancing can often be a great option for those who want to change their mortgage to something that better suits their needs. From altering the type of rates on a loan, to reducing the monthly costs; there are often quite a few reasons why a homeowner might want to replace their current mortgage.
Before you make the decision to refinance, it might be a wise idea to take a closer look at what’s involved and everything that doing so encompasses; from the benefits, to the additional costs and fees that can come with replacing a home loan.
How much does it cost to refinance a mortgage?
While refinancing can often help you to reduce your home loan’s costs, there are often quite a few expenses that you’ll have to pay in order to refinance your mortgage. Because of this, taking the time to determine whether or not the benefits of replacing your existing home loan are worth the additional expense that can come with it is often important.
Some of the main fees and costs that be involved with these types of home loans include:
While getting a home appraisal isn’t always necessary, it can often be a good idea to get your property appraised before going any further. While you could go for a no appraisal refinance, you’re unlikely to get as many benefits as you would if you had one. Often, these can come to around $400.
In some cases, a lender may charge an additional fee for the costs of having their attorney review all the documents to ensure that everything is legal. This can often come to anything in between $300 and $1200.
Your lender is likely to charge you a fee for funding your new loan, and this cost can often come to about 1 to 5 percent of the mortgage’s overall amount.
While this is optional, paying for discount points can often help to reduce your home loan’s interest rates – which can often benefit you later on.
Generally, you’ll be required to sign a number of documents in order to complete your loan. This can include things like the seller’s disclosures, truth in lending, and many more. For these fees, you’re likely to have to pay something between $200 and $400.
If your property is in a federally designated flood zone, you might have to pay an extra fee to add floor or life of loan insurance coverage – and in most cases, you’ll be looking to pay $50 to $150 to get this certification.
Home inspection fee
While not always required, you may have to pay a home inspection fee. In general, the inspection will need to be taken care of by a professional to make sure there are no potential issues, and their services will often cost you around $400.
Loan application fees
When refinancing, you’re replacing your old mortgage with a new one – and because of this, you’ll often have to pay around $200 for the loan’s application fee.
The loan origination fee is often required to pay the loan officer working on your application, and it can often come to around 1 to 3 percent of the total loan amount.
Generally, recording fees are paid to put your refinance on the public record. In most cases, they’re determined by government organizations, but on average can cost between $25 and $250.
Home survey documents for your house are often requires and, for a professional survey, you’re typically looking to pay around $100 to $350.
Title search fee
In most cases, a title company will be needed to ensure that the seller is legally allowed to sell their property (the title is often known as a deed). On average, this kind of fee can cost you around $200 to $400.