YOU ASK:

What are the closing costs when I refinance my mortgage?

WE ANSWER:

There are no fixed amounts or percentages for the closing costs of a refinanced mortgage. It really depends from lender to lender, as well as from state to state. But generally, the closing costs will be around 3 to 6% of the outstanding principal.

These include the following:

  • Loan application fee. This involves the processing of your loan request as well as the evaluation of the credit report. This is a nonrefundable fee, which you have to pay regardless of whether the loan is approved or denied.
  • Lender's points. Each point is equivalent to 1% of the mortgage loan amount. This may refer to chare points or to loan-discount points. You can negotiate with the lender as to how many points you will be charged.
  • Loan origination fee. Charges for the lender to evaluate and prepare your loan
  • Inspection fee. This includes a fee to inspect the house for the presence of termites or of structural problems. There may also be a water test and a septic system test.
  • Appraisal fee. The fee is charged for the appraisal of the value of the home. This is to ensure that the property is worth more than or as much as the amount being loaned.
  • Lenders title insurance and lenders mortgage insurance. This premium is paid in order to protect the interest of the lender on the loan. Mortgage insurance for refinanced mortgages has lower premiums as compared to the premiums of a newly mortgage insurance.
  • Attorney's review or closing fee.
  • Homeowners insurance. This covers for hazards faced by the home. This protects against losses in case the house is damaged by a covered cause.
  • Survey fee. This looks into the improvements made on the property, as well as where the buildings are located.

Other costs include the administrative fee, the wiring fee and the flood certification fee. Ask for a copy of your settlement papers. That way, you can review the costs and the terms and determine about how much you need to pay.

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