Typical Closing Costs of Refinancing

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When you choose to refinance your home you can and should expect to pay closing costs, just as you did when you first bought your home. Although these closing costs are not identical to what you paid the first time, they are quite close and anyone who has ever borrowed before; closing costs are standard in any lending agreement. It is important to be aware of these hidden costs when you are creating a refinancing agreement so they are not a surprise to you in any way.

There are four main closing costs that you will most definitely run into through any lender and any type of refinancing agreement and we have outlined them here for you below.

  • As to be expected the company which provided the title insurance and escrow services will require a payment when the refinancing goes through successfully. The title insurance protects both the new home owner and the lender from any problems or in discrepancies that can occur during the transfer of the party from one owner to another. Escrow is a very important part of any refinancing process to make sure that the money gets to one party to another with no problems or worries.
  • Lender fees and points are the next set of closing costs you will have to include in your financial calculations. The fees paid to the lender will include services like document analysis, credit reports, certification, etc. Although many times these fees to be referred to as “junk” fees there is no way getting around paying them
  • A new property appraisal is always necessary to complete your refinancing for your mortgage interest and payments; this is another fee that will be added to your closing costs. You can expect to pay somewhere between $300 and $400 for a home appraisal.
  • Lastly, you will have to pay out the remaining property taxes that are due prior to completion of the refinancing. Since not paying these taxes can result in a legitimate lien against your home, there is not a lender out there who will proceed with this type of payment against you.

Although this outline is quit basic and easy to understand, it is quite difficult to quote actual fee prices as each lending company is different and the fees depend greatly on how much work needs to be done to acquire this refinancing mortgage for you and your home.

The main point of this article is to make sure you are aware of these closing costs and you can afford to pay them. There is no point going through the entire refinancing process to get your interest rates down if the closing costs are going to make your financial situation that much worse than they were before.

Refinancing is a great opportunity for many home owners today who take the time to consider all the scenarios, all the fees that will need to be paid and still make sure they are coming out on top after everything is paid and finished. If you do the calculations and find you are worse off then before, than refinancing is not for you.

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Filed Under Home Refinancing, Real Estate 

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One Response to “Typical Closing Costs of Refinancing”

  1. Wednesday Round Up | Financial Learn on March 26th, 2008 3:17 pm

    [...] also like to thank the Homeowners Insurance Lowdown blog for posting “Typical Closing Costs of Refinancing” in the Carnival of Homeowners #30.  Print This Post  Subscribe in a reader [...]

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