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Refinancing fees are not always easy to calculate. A good ballpark estimate for the total cost of a refinance is somewhere between 3 and 6 percent of the amount. This article will look at how this amount is broken down and what each fee means for you and your refinance mortgage.
In addition to basic refinance fees there are prepayment penalties and other costs due for paying off any mortgage but refinancing costs are in addition to these . The fees are different in different states and also different with different lenders. Some of the usual costs ranges and fees that you need to know about are the following .A good idea is to request a copy of your settlement cost papers a day ahead of your loan closing so that you have time to look at the documents and check out the terms:
The Application Fee covers the initial costs of processing the loan as well as verifying your credit report. This fee is often payable whether or not your loan is accepted. The amount payable is usually between $75 and $300.Then there is the Loan Origination Fee, this can be charged by the lender to evaluate and prepare the loan and can range from 0% to 1·5% of the loan principal. Next we mention Points and each point is equal to 1 percent of the mortgage loan amount and there are two types of points that you could pay.
There are loan discount points which is a single charge you can pay in order to reduce the loan`s interest rate. The second type of points are those sometimes charged to earn money on the loan. The number of points you are charged is negotiable with the lender and can be between 0% and 3% of the loan amount. You can decide whether it is worth your while to pay points to reduce the interest rate by thinking of how long the mortgage is for. You may find that the points paid are not fully deductible from your income tax in the year they are paid. The Appraisal Fee pays for an appraisal of your home so that the lenders are confident that the property is worth the amount to be loaned.
The appraisal fee is sometimes included as part of the application fee. If you ask for it you are entitled to a copy of the appraisal. Costs for this range from $300 to $700. The Inspection Fee is when the lender requires a termite inspection and an analysis of the structural condition of the property by qualified consultants. There might be additionally a requirement for a septic system test and a water test to ensure that the house supply is adequate. Sometimes the state may require more inspections such as pest inspections. There is a cost range for inspections of between $175 and $350.
Attorney review or closing fee is a fee paid to the lawyer or the company that actually conducts the closing for the lender-from $500 to $1,000 .Your lender will require that you have a homeowner´s insurance policy effective at settlement . Further fees may be required such as the FHA = 1·5%plus ½% per year, if you buy an FHA home, as well as title search and title insurance = $700-$900. Also account for the survey fee=$150-$400 and the prepayment penalty, which in some cases costs one to six month`s interest payments.
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