Common Refinance Costs Required at Closing on a New Mortgage

Locking in a lower mortgage rate, compared to your existing home loan, may seem like a wise financial decision. As interest rates remain low, mortgage rates are at historic lows giving existing homeowners several mortgage refinance options. Lowering your monthly mortgage payment, shortening the length of your loan, or getting a cash out from refinancing are all popular choices with low mortgage rates.

If you are a homeowner and find yourself in this situation, it is important not to forget about refinance costs that are associated with closing on a loan. Don't let the lure of low mortgage rates blind your judgment on refinancing your home, without accounting for all refinance closing costs. In some cases, a home loan refinance with high closing costs may end up costing you more money than it saves.

If this is your first time refinancing or don't know what to expect, check out the list of common refinance costs below.

Here are some common refinance costs that you can expect to incur when closing on a new home loan. Keep in mind that costs and fees may vary depending on your lender and the state in which you live.

• Appraisal Fee - This fee will pay for your home to be appraised. If you are dealing with your current lender, you may be able to have this fee waived depending on the type of loan.
• Title Insurance - Covers the costs tied to the title insurance company.
• Application Fee - Charged by the lender to cover the costs of processing your loan for things like checking your credit and other paperwork. In some cases this fee could be waived if you are working with your existing lender.
• Survey Fee - Survey fees are often included as part of refinance costs and could include surveys to ensure your house is not in a floodplain.
• Homeowner's Insurance - If you plan to pay for your homeowner's insurance through escrow, you can expect this as one of your refinance costs.
• Attorney's Fee - Fee's required by a lawyer or law firm to process the loan.
• Origination Fee's - This is usually where the bulk of refinance costs come from and usually range from 1% - 2% of the total loan amount. For example, the origination fees n a $100,000 loan could range between $1,000 - $2,000.
• Points - Prepaid finance charges to improve the interest rate on the loan. Pay attention to lenders who will quote you very low rates, well below the current market rate. Normally these loans come with points which means your refinance costs will be much higher.
• Inspection Fee's - Charges related to the costs of inspecting the home.

Refinance costs can make or break a new home loan. Even with low interest rates, finding out how much money it could take to close on a home loan can persuade homeowners from refinancing. Don't be caught surprised by these costs when you go to refinance. Do your homework and work with your lender to reduce or waive as many of these costs as you can.

What other refinance costs have you had to pay for?