Refinance costs

amyandhoward · Joined: 02 Dec 2007 Posts: 1 1.99 Dollars($)

Hello,

I am new to this site and in the following days I will have some questions about refinancing. I have been looking through the posts and I read somewhere that refi costs are 5000.00 or more in closing costs. Is this true? Drawing up some documents can't be that expensive.Sounds like a real occupational cash cow to me.

jenkin7 · Posted: Mon Dec 03, 2007 5:24 am Post subject:

Hello Amyandhoward,

There are a number of fees associated with refinance. The cost of closing generally include title and escrow fees, lender fees, appraisal fees, credit fees, insurance and taxes. There is another optional expense if you want to buy down your interest rate.

Usually the costs are less than what is required to pay at the primary mortgage closing and your lender will give a Good Faith Estimate of closing costs.

banker0679 · Posted: Mon Dec 03, 2007 10:28 am Post subject:

it depends on your loan amount...and what state you're in.

If you're in FL you will need to pay taxes that are really expensive. I just did a loan for someone there...180k loan amount..and taxes were approx 1,000. This didnt include other the other figures.

It should range from 2.5-3.5% of the loan amount.

livinginnky · Posted: Mon Dec 03, 2007 1:10 pm Post subject:

Closing cost depend on a lot of things. And yes it is somewhat of a cash cow. It happens to be how all of the mortgage pro's on this site feed their families. I certainly enjoy making money by helping people.

As far as the costs themselves they can vary and really all depend on what you are trying to accomplish. There is a thing called a "break even period" when you are refinancing. It helps decide how much you should pay in closing costs based on when you are planning on selling or refinancing again, if at all.

Most people aren't aware there is a little more to it than just drawing up some docs.

You have at minimum in any mortgage transaction...
1. Borrower
2. Lender
3. Title Company/Attorney
4. Appraiser
5. Insurance (Homeowners, Title, Flood)
6. Government (Taxes, Recording Fees)

So you see you need someone to be the customer, someone to loan the money, someone to prove the value, someone to insure it, someone to tax you on it (lol, not really lol), and someone to write it all down and collect the final signatures.

It all sounds simple but it really isn't. From start to finish there is tons of work to be done and a lot of money is put on the line so of course in the end, everyone expects to get paid.

Hope this helps put things in to perspective. And as I said before closing costs vary and really depend on your persoanl goals.

evolovik26 · Posted: Mon Dec 03, 2007 8:23 pm Post subject:

As Eric mentioned above there are alot of things to consider. And alot of people involved that are looking to get some $$ for their work.
But as I tell to all of my clients the best way to avoid paying fees and interest is to buy with cash.
However if you don't have that much cash on hand then you need to deal with the rules put up by the institution that does have it.
Wait till you have to sell the house you think 5k is alot? Most real estate agents charge 5-7% of your property value to sell your home.
But you could always go and learn the industry yourself and then you can avoid those fees as well.
And other things you can do to save money:
Fix your own car
Inhome surgery
Make your own soap
etc.
Sorry if I come across as making fun of you but I don't go to the restaurant and try to get a steak at the same price the butcher sold it for.
Fact is everything cost money and it is your job to be an informed consumer and to find the best deal for yourself.
Oh and last thing 5,000 is not that much I have seen closing costs of 30k+ ( it really depends on a loan size )

rick · Posted: Wed Dec 05, 2007 10:53 am Post subject:

I'm in California, and non-recurring closing costs for a loan, say in the $400,000 range, are typically right around $3,000. So, it's usually less than 1%, which I don't think is that bad. On a $400,000 loan, if you can save .25% in interest, you're saving $1,000 a year, so that's a 2.5 year pay back period. That's one good way to look at it. By law, once you fill out a loan application, the mortgage broker must give you a Good Faith Estimate within 3 days which will itemize the closing costs. However, many mortgage brokers (at least I can speak for myself) will give you a Good Faith Estimate at the very beginning.

The reason closing costs may be higher is that there are also "recurring closing costs." These are items that you pay on a continuous basis, like interest, property taxes, and insurance, so they should already be in your budget.

foffracing · Joined: 07 Dec 2007 Posts: 1 1.45 Dollars($)

Lets get this straight!!! Fees will cost you 3.5% to 6% of the loan amount. Depending on the taxes in your area, title fees, is this a FHA loan (PMI 1.5% of loan amount up front), Commitment fees, and the LO's origination fee. The LO's origination fee is what the LO gets paid from. This is for the work the LO had to do. What are the factors in your loan? How much time did the LO spend on your loan? Did the LO come out to meet with you or did he just mail it out? There are many things to consider. I can blow sunshine at a borrower all day with low closing fees, but always remember, you get what you pay for.

jenkin7 · Posted: Fri Dec 07, 2007 4:15 am Post subject:

Hello Foffracing,

Welcome to the forum.

Hope you will enjoy coming to the forums.

rick · Posted: Fri Dec 07, 2007 11:31 am Post subject:

foffracing,

If your comment was in response to mine, I'll say this just once, as I have no interest in a lengthy debate in a forum where we are trying to help people. The Non-Recurring Closing Costs for a $400,000 loan are indeed about $3,000 where I work. I am an experienced mortgage broker and I have no reason to exaggerate this. This does NOT include a loan originatin fee, which is always optional for the buyer. If it did, then we'd be talking more like, say 1.75% of the loan amount.

PMI is unnecessary.

Please remember that where I am, loan amounts are higher, so naturally the % is lower.

Finally, as I mentioned, I am talking only about NRCCs, not total closing costs.

Enough said. If you would like to kick it around, let's do it in private.

If you knew anything about my business model, you would know that I do not "blow sunshine at a borrower."

Thanks.

evolovik26 · Posted: Fri Dec 07, 2007 4:34 pm Post subject:

What was being discussed is the cost to the borrower not what a broker gets out of it. And that is typically 2-3 % of the loan size + another 1-2% in escrows and prepaids. What alot oborrowers dont understand is this is not being taken away from them by one "bad person" bt is a cost of doing business. They get to skip mont of payments which saves them extra money and their taxes and insurance need to be paid anyway. And if its a loan that makes sense it is likely to help them out alot. But its hard to think about that when you looking at the total on GFE

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

I agree with the previous post that closing costs are typically 2 to 3 percent of the loan amount. If you have a loan amount over 300K then I wouldnt pay more than 2% of the loan amount.

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