Charges for refinancing equity loans vary between lenders. You may hear the term "no cost refinance" advertised, but most often, the costs of refinancing are simply rolled into the total loan amount. Talk with a number of lenders to get the best deal.
Here are some of the common fees and closing costs you may encounter during your refinance:
Title & Title Search
A title or title search fee covers the costs associated with confirming the ownership of the real estate with regulating authorities. Normally includes the cost of an insurance policy covering the borrower in case of damages arising from discrepancies in the property title. One way to save some money with this fee is to ask your current policy issuing company to re-issue the policy at the re-issue rate.
Application Fee
The application fee covers processing costs associated with processing an application and checking your credit.
Attorney Review Fees
The attorney review fee covers payments to the lawyer or law firm that performs closing for the lender. This is a contract service provided to the lender. The attorney is required to represent both sides in the transaction, to insure it is closed and recorded according to all federal, state, or local laws and regulations. It is possible, but highly unusual, to retain your own attorney to represent you at all stages of the transaction, including closing.
Points or Origination Fees
Points are determined by the lending institution and the loan program you have selected. A point is equal to one percent of the total loan amount. As an example, one point on a $300,000 loan is $3,000. Points can sometimes be rolled into the total loan amount; this is common in "no cost refinance" programs. The lending institution charges loan origination fees for sourcing and delivering the loan. Origination fees are also expressed as points.
Appraisal Fee
The appraisal is a professional and defensible estimate of the value of a home or property. It is often based on comparative market analysis (CMA), which takes into account similar homes or properties sold recently in the same area.
Prepayment Penalty
It is advisable to check if your current home loan includes a prepayment penalty. If it does include a penalty, this needs to be considered in your refinance decision. It does not automatically mean that refinancing is not a good idea, but could reduce the benefit. Prepayment penalties are forbidden on loans from federally chartered credit unions, FHA, and the Veterans Administration (VA).
Possible Ranges
* Application Fee: $75 to $300
* Appraisal Cost: $150 to $400
* Survey Costs: $125 to $300
* Homeowner's Hazard Insurance: $300 to $600
* Lender's Attorney's Review Fees: $75 to $200
* Title Search and Title Insurance: $450 to $600
* Home Inspection Fees: $175 to $350
* Loan Origination Fees: 1%
* Mortgage Insurance: 0.5% to 1.0%
* Points: 1% to 3%.
