How to Keep Mortgage Refinance Closing Costs Low

Mortgage refinance closing costs can run a few thousand dollars on a new home loan, depending on the amount that is being financed. For homeowners who neglect to research these closing costs and other fees, it can prove to be a mistake. To avoid the sticker shock of refinancing your home, make sure you research all closing costs from each lender you are working with.

It is also a good idea to work with several lenders and compare the loan details of each. Instead of focusing only on the interest rate, consider all mortgage refinance closing costs that will be charged by the lender. Using all of these loan details, you can run a break-even analysis on each possible home loan to determine the best fit for you.

Check out the tips below to learn more about avoiding high mortgage refinance closing costs.

Here are a few ideas for saving on mortgage refinance closing costs to help stretch your every dollar.

• Never Finance Closing Costs - If at all possible, never finance any mortgage closing costs. You can either pay these fees out of pocket at signing or roll them back into the loan amount. If you decide to finance the costs in this manner, you will be paying interest on them for the life of the loan, which will be much more expensive.
• Review the Good Faith Estimate - Ask your lender for a good faith estimate to review all mortgage refinance closing costs. While not the exact loan documents, a good faith estimate can help signal out all required fees and costs that are due at closing. Pay special attention to the new loan amount to see if the lender has automatically rolled your closing costs back into the mortgage.
• Work With Your Current Lender - Another way to save on closing costs is to work with your current lender. Often times your existing lender will waive certain closing costs if you have been a good customer in the past. If they want to keep your business, then they may agree to waive costs such as the appraisal fee.
• Avoid Escrow - There is nothing wrong with paying your homeowners taxes and insurance through an escrow account. However, if you decide to use escrow on your new loan, then you will probably have to make some prepayment amounts. While these expenses will be credited to your escrow account, it is money out of your pocket at closing.
• Close at Month End - Anytime you refinance, you will have to pay interest on the loan for the remaining days of the month. The closer you can close to the end of a month, the lower your mortgage refinance closing costs will be. This could save you a couple hundred dollars in extra charges and put that money back into your pocket.

Refinancing your mortgage can be a great opportunity to save some money, especially during these hard economic times. It can also provide an opportunity to help you shorten the length of your mortgage so you can own your home sooner.

While there are plenty of reasons why it makes sense to refinance, just be sure the mortgage refinance closing costs don’t get in your way. Using a few of the tips above can help decrease the amount of money you need to bring to closing and put some money back into your pocket.