Refinance rates refer to fees related to taking out a new loan to pay off an old loan. Refinancing is a common practice in the mortgage industry. Homeowners often refinance mortgages in order to obtain a lower interest rate or to obtain cash back from accrued home equity.
Mortgage lenders can assess multiple refinance rates. Fees can vary from $100 to $2500 or more. Refinance fees can be assessed for loan applications, obtaining credit reports, real estate inspections and appraisals, attorney review, loan document preparation, and settlement fees.
Oftentimes, borrowers incur prepayment penalties for paying off their home loan early. It is important to review original loan documents to determine if a prepayment clause is included. Not all mortgages include prepayment clauses. Home loans obtained through credit unions and government secured mortgages are prohibited from including early payoff penalties.
Borrowers should spend time comparing mortgage lenders and refinance rates in order to calculate the true cost of mortgage refinance. An excellent resource for comparing mortgage loan refinancing is MortgageLoan.com.
Homeowners can utilize mortgage refinance calculators to determine if refinancing their home loan makes good financial sense. Borrowers can enter the amount of their current home loan, interest rate, terms of the mortgage note, number of payments made, mortgage insurance, property taxes, homeowners insurance, and appraised property value.
After entering current costs associated with their home loan, borrowers can compare the refinanced mortgage amount, interest rate, term, and settlement costs to determine overall savings.
If borrowers choose to move forward with mortgage refinancing, the next step involves contacting mortgage lenders to obtain a Good Faith Estimate. Lenders review the current mortgage costs and terms and provide an estimate of refinance rates. Good faith estimates only cover costs incurred by the lender and do not include additional refinance fees assessed from third-party providers such as home inspections and appraisals.
Home appraisals are required in order to determine the current market value. Depending on the lender, home appraisal fees can either be included in the refinanced mortgage or paid out of pocket. On average, home appraisal fees range between $300 and $700.
Home inspections are generally required in order to enter into refinancing. Home inspections are required to determine the overall condition of the home and fees range between $150 and $400.
Refinance fees can also be assessed for loan origination, property records search, title insurance, flood monitoring and flood certification, loan points, and survey fees.
Borrowers must undergo the same loan application process as they did when first buying their home. This financial audit determines if homeowners qualify for a new home loan and are financially prepared to pay associated refinance rates.
Although the process of refinancing mortgages can be cumbersome, homeowners can potentially save thousands of dollars over the term of the loan. Careful consideration should be given when extending the terms of the loan. If necessary consult with a certified housing counselor or mortgage consultant to ensure home loan refinancing is the best financial option.