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Advice and information on closing costs for refinance loan - The Bills.com Blog
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Advice and information on closing costs for refinance loan
Thursday, Jan 24, 2008
Question: I am in the process of refinancing and combining my first and second mortgage. I am using a broker and I would like to know if the cost associated with the loan are unreasonable and are they negotiable? Also can I look at the Good Faith Estimate and derive how much profit the broker is making?
Answer: Thank you for visiting the Bills.com blog. I'm glad that you've decided to do your homework before committing to a loan. Many borrowers fail to ask questions or comparison shop, and end up paying a lot more for their loans than they should pay.First, I would also strongly encourage you to compare rates and offers from multiple lenders. You can apply with Bills approved lender network here, and see if you can get a good deal: Refinance Quote
I cannot accurately estimate how much you should expect to pay for a refinance loan. The appropriate amount of the closing costs for a potential loan is much more difficult to judge, as the amount of closing costs are generally calculated as a percentage of the loan amount. On average, closing costs range between 1% and 5%
of the total amount of the loan.
Lenders are required to give you a good-faith estimate of your closing costs within three days after you apply for a loan. Some will give you such an estimate even before you apply if you ask for one. Even if it is no guarantee, this written estimate will give you an idea of what kind of fees you can expect to pay, as well as an opportunity to negotiate for a better deal. Keep in mind that the good faith estimate does not include such out-of-pocket costs as state mortgage taxes, homeowners insurance and property taxes, which you may be expected to pay at the time of closing. In fact, your total tab at closing could be several times more than originally
Lenders are required to give you a good-faith estimate of your closing costs within three days after you apply for a loan. Some will give you such an estimate even before you apply if you ask for one. Even if it is no guarantee, this written estimate will give you an idea of what kind of fees you can expect to pay, as well as an opportunity to negotiate for a better deal. Keep in mind that the good faith estimate does not include such out-of-pocket costs as state mortgage taxes, homeowners insurance and property taxes, which you may be expected to pay at the time of closing. In fact, your total tab at closing could be several times more than originally
estimated.
Also, it will be difficult to know how much profit the particular broker is making, because I am sure they will not give out that information. I suggest you contact your current lender, as you have an existing relationship with them they might be more open to giving out information about the breakup of the fees.
I invite you to visit the Bills.com Home Refinance Resources page , to learn more about refinance loans. If you enter your contact information in the Bills.com Savings Center at the top of the page, I can have several pre-screened mortgage lenders contact you to discuss the options available to you.
I hope this information will help you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, it will be difficult to know how much profit the particular broker is making, because I am sure they will not give out that information. I suggest you contact your current lender, as you have an existing relationship with them they might be more open to giving out information about the breakup of the fees.
I invite you to visit the Bills.com Home Refinance Resources page , to learn more about refinance loans. If you enter your contact information in the Bills.com Savings Center at the top of the page, I can have several pre-screened mortgage lenders contact you to discuss the options available to you.
I hope this information will help you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by annie on Sunday 23rd August 2009 19:38
Is $1015.00 considered a high price for a loan application fee for a refinance?
2. Posted by Bill on Monday 24th August 2009 09:57
Yes. That is a very high price for a loan application fee. Though fees for refinances vary loan to loan, here are some ballpark numbers: Application fee: $100. Credit report fee: $24. Underwriting fee: $495. Processing fee: $650. I'm assuming you are asking about fees that will be charged during settlement / closing. If that's the case, then the fees should not be looked at on their own, but rather as a total package -- so how much are you paying in total fees and points? Once you calculate that, this tells you what the true cost of their loan and rate are. If you get a 5.00% rate on a $250K loan and pay $5K in total fees and points, then that 5.00% rate is costing 2%, or $5K. However, if this is a loan application fee that a lender, broker or bank is charging you simply for taking the loan application and they will then determine what mortgage offer to make to you, then run the other way immediately! Never pay to have a lender, broker or bank to provide proposed terms on a mortgage. There are plenty of free services (including Bills.com at https://www.bills.com/homeloan/refinance/?rbc=askbill) that can help you find mortgage quotes.