Refinancing your mortgage can be a great way to save money and lower your monthly payments. But just like when you bought your home, you'll need to pay closing costs. Generally, you can expect to pay between 2% and 6% of your mortgage loan amount in closing costs. Refinancing closing costs are fees and expenses related to replacing your current mortgage balance with a new one.
These costs typically include many of the same fees you paid when you first closed on your home loan. The exact amount of closing costs you'll pay depends on the type of loan you choose, the lender you use, and the state you live in. Some of the most common closing costs associated with refinancing include:
- Origination fee: This is a fee charged by the lender for processing your loan application. It's usually a percentage of the loan amount.
- Appraisal fee: This is a fee charged by an appraiser to assess the value of your home. It's usually required by lenders.
- Title search fee: This is a fee charged by a title company to search public records for any liens or other claims against your property.
- Recording fee: This is a fee charged by the county recorder's office to record the new mortgage documents.
- Underwriting fee: This is a fee charged by the lender for evaluating and approving your loan application.
- Attorney's fees: This is a fee charged by an attorney to review all of the documents related to your refinance.
- Survey fee: This is a fee charged by a surveyor to measure and map out your property.
- Tax service fee: This is a fee charged by a tax service company to verify that all of your property taxes are up-to-date.
PMI is an insurance policy that protects lenders in case you default on your loan. It's usually required if you have less than 20% equity in your home. It's important to remember that not all lenders charge the same fees. Some lenders may waive certain fees or offer discounts on others. Be sure to shop around and compare offers from multiple lenders before deciding which one is right for you. Refinancing can be a great way to save money, but it's important to understand all of the costs associated with it.
Knowing what to expect can help you make an informed decision about whether or not it's right for you.