What You Need to Know About the Real Mortgage Refinancing Costs

Determine your total interest cost: Your total interest cost will be reduced through Refinancing your mortgage, your total interest cost is basically derived from the interest rate, your mortgage loan balance and the loan term period. Most of the time, refinancing institutions overwhelm people seeking to refinance their mortgage with their low interest rates. They put less emphasis on - intentionally or otherwise - the loan term and the loan balance.



As a rule of thumb, it is wise to calculate the total interest cost by considering the loan duration because the borrower tends to stretch it enough, which mounts up the total interest cost giving injustice even to a very low interest rate. Determine cost difference by comparing your current mortgage to the terms of a refinanced mortgage: Weigh what you're getting. Here's how. Compare your mortgage cost by getting the annual percentage rate (APR) on your new loan and then compare it to the interest rate on your current mortgage loan.



The point really is, with your current loan you only pay the interest. While on the new loan, interest rate charges, setup fees, origination charges and closing fees are being reflected at the annual percentage rate. So if you find your APR lower than the interest rate on your current loan, then you are trading expensive money for cheap money. Avoid a long term repayment: As interest rates fluctuate, you get more encouraged to refinance your mortgage. This is very common because you can potentially save a lot of money if you plan on keeping your home for a while.



However, you do not need to refinance your mortgage every time the refinancing guys offer you a lower interest rate. Otherwise, you'll never get to fully pay your mortgage off after 30-40 years. By principle, a loan modification plan left home-owners with two choices: to continue paying their monthly mortgage obligations in order to qualify for a mortgage refinance; or stop paying their mortgage entirely. Not paying at all will cause foreclosure or, depending on your lender, you can work together to qualify for a loan modification.



The

Mortgage Refinancing - Counting The Costs

Mortgage refinancing means paying off your existing mortgage with a new loan, using the same property as collateral. The amount you'll save by refinancing will vary depending upon current interest rates, refinancing costs and tax consequences.



Mortgage refinancing makes sense if Interest rates have dropped more than two points since you got your original mortgage, or if you want to change from an adjustable-rate to a fixed-rate loan to avoid future interest hikes.



As to the costs of mortgage refinancing; expect to pay between three and six percent of the mortgage, plus any prepayment penalties you might incur by paying off the existing loan. Below are some of the fees and charges you are most likely to encounter. Costs vary widely from state to state and loan to loan. These numbers are average estimates only.



Application Fee ($75 - $300): This charge covers the initial costs of processing your mortgage refinancing request and checking your credit report.



Bad credit will result in a higher interest rate.



Appraisal Fee ($150 - $400): This fee pays for an appraisal which is a supportable and defensible estimate of the current market value of the property.



Attorney's Review Fees ($150 - $300): The lender will usually charge you for fees paid to the lawyer or company that conducts the mortgage refinancing closing. Settlements are conducted by lending institutions, title insurance companies, escrow companies, real estate brokers and attorneys for the buyer and seller.



You may want to retain your own attorney to represent you at all stages of the mortgage refinancing transaction.



Loan Origination Fees (Usually 1% of loan): The origination fee is charged for the lender's work in evaluating and preparing your mortgage refinancing.



Points (1% of loan): Points are prepaid costs imposed to increase the lender's yield on the loan. Paying points can lower the interest rate, which will lower the monthly payments.



Some lenders will roll the points into the loan. The downside is that the borrower will be paying interest on these fees over the life of the loan.



Private Mortgage Insurance (PMI) Usually 0.5% to 1.0% of loan): PMI is required when the amount of the mortgage is greater than 80% of the home's appraised value. This insurance protects the lender against loss if the borrower defaults on the loan.



Title Search and Title Insurance ($450 - $600): These cover the costs of examining the public record to confirm ownership of the real estate, and the costs of a policy insuring the policy-holder for any loss caused by discrepancies in the title.



Be sure to ask the company carrying the present policy if it can re-issue your policy at a re-issue rate. This could save you up to 70% of what a new policy would cost.



FREE Refinancing Quote

Applying for refinancing is easier than getting a first mortgage. Much of the process can be done online. You can get a free, no-obligation quote from a leading mortgage provider at Easy Mortgage Refinancing.



Many homeowners get their mortgages, make their payments and don't think about refinancing. They wind up paying more than they have to for their homes.



Don't make the same mistake.