House Refinance Center
Mortgage Refinance Fees
| Closing Costs Mortgage refinancing will cost you. There are no free rides. So be informed and be prepared to pay. The following will give you an idea of what to expect. With knowledge and education, you will not be surprised. And remember, if you suspect that you are being gouged, just walk away. Find another lender. Credit report $25 to $80 Appraisal $150 to $400 Home inspection $175 to $350 Pest inspection report $150 to $350 Taxes Recording fees $15 to $45 Escrow $300 to $450 Title policy Points 1% to 2.5% of the loan amount Application fee $75 to $300 Title search and title insurance $450 to $600 Lender's attorney's review fees Loan origination 1% to 2% Ask your lender for an estimate on these fees. Calculate the monthly savings the refinance mortgage gives you. Then determine how much you will save in monthly mortgage payments over three years. If this amount does not cover the fees it is costing you to refinance, then it is not worth the trouble. |
| GFE Important Dates Your Good Faith Estimate (GFE) gives you an estimate of your settlement charges and loan terms if you are approved for the mortgage loan. On page one are the dates. Please pay close attention. The interest rate for this GFE is available through___. After this time, the interest rate, some of your loan Origination Charges, and the monthly payment shown below can change until you lock your interest rate. If you do not lock your rate by the specified date, some substantial changes could be made to your mortgage. And in many cases, to the benefit of the lender. After you lock your interest rate, you must go to settlement within ______ days (your rate lock period) to receive the locked interest rate. If for some reason there is a delay in closing, your rate could be increased. So be sure to close on time, or have a clause that would address this issue, and spare you the penalty. |
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| Ouch! Private Transfer Fee At closing be sure to ask if you are paying a Private Transfer Fee. This could add a few thousand dollars to your closing costs. Developers need to recoup some of their hard costs, and this fee is one way to accomplish this. It is sometimes called a Reconveyance Fee Rights. Every time the house sells a 1% of the selling price goes back to the original developer. This could be for 99 years, 50 years, 25 years or whenever. This is a covenanted mandate, it runs with the land, so there's no point in arguing. Just pay up. It is illegal in 4 states, Missouri, Kansas, Oregon and Florida. It is okay in California as long as it is disclosed upfront. Texas prohibits the fee in certain situations. The payoff for the developer is that he has a financial instrument, which is an income stream. This is worth something. He has the opportunity to sell this instrument to Wall Street investors for a lump sum of money. This funding helps him with his cash flow and with his infrastructure costs. In theory, he would then pass on some savings to the purchaser of his houses. The purchaser pays a lower price. Not everyone is convinced that this is a good idea. It is sure to be a controversial topic, and a political nightmare. The National Association of Realtors, and the American Land Title Association have come out against the fee. Here are the two big questions. First, Is this fee required to be disclosed on the HUD-1 form? And second, given two houses that are similar, one with the fee attached and one without the fee, which one will the purchaser choose? Is this fee any different from a Municipal Utility District (MUD) or from a Public Improvement District (PID)? Typically a MUD or a PID is reflected on the property tax bill. The county or city collects the money and forwards a set amount to the developer. And this is done annually. This transaction goes smoothly, and there is no fighting or fussing. PIDs and MUDs are more transparent than the Private Transfer Fee. A PID or MUD has a board of directors and the special tax assessment is for a specific project, such as a library or parking, or for streets and sidewalks. In the long term, the homeowners' tax bill will decrease as more people move into the neighborhood and the city has a larger pool of homeowners to share the tax burden. The problem with the Private Transfer Fee is that it comes as a shock to the buyer. It might be mentioned in the CC&Rs (Covenants, Conditions & Restrictions). However, the title company usually sees the CC&Rs a couple days before closing, and with the rush to close on time, this is overlooked. The bottom line is that the purchaser doesn't get enough time to discuss the CC&Rs with the title company. If a homeowner is aware of the Private Transfer Fee, he will definitely ask for a better deal on the house price, plus some extras thrown in for good measure. Buyer Beware! |
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| How To Save On Closing Costs When you are buying a house and after you apply for the mortgage, the lender gives you a Good Faith Estimate (GFE). The GFE itemizes the various fees you are expected to pay in the process of closing the deal. This is your opportunity to negotiate, and bargain for the best deal you can get. Do not automatically accept the services that your lender provides. Appraisers, house inspectors, surveyors and insurance agents can all be found online. Alternatively, you can ask a friend to refer some contractors. Contact these companies directly and tell them how much you were quoted. They will most likely beat the prices. Your realtor will steer you to a settlement company that he works with. Do not accept this company until you have had a chance to shop around. You have the right to decide who closes your mortgage. Ask the seller to pay all or part of the closing costs. Insist on a fixed amount such as $5,000 or $7,000. Avoid having the seller pay for specifics such as the appraisal, or the house inspection. Scheduling the closing date is crucial. You should close on the end of the month, or a few days before. You have to prepay the interest from the closing date until the end of the month. For example, if you close on the 10th of January, you will have to pay 21 days of interest. If you follow these steps, you could save thousands of dollars on your closing costs. RESPA requires lenders to provide the borrower with a final copy of the GFE up to one day before closing. This gives you the chance to examine the GFE, and compare what was quoted with the actual costs. By law, if you accept services from the lender, there are some charges that can not be increased, and others that can only increase by a maximum of 10%. |
within the guidelines of the GFE. They had four months to get this process right. No more test drives. Lenders must give each borrower a Good Faith Estimate of the costs involved in getting the mortgage. The estimate is an itemized list of the costs and fee. It includes inspections, title insurance, taxes and appraisal, to name a few. This document is a crucial part of the total mortgage contract. The lender is bound by each figure or estimate he puts on the GFE. Because of this lenders are more likely to spend extra time making sure that the GFE is accurate. If they underestimate a cost, too bad, they are stuck with it. If they overestimate, then there is a good chance that they are losing business to a competitor. After the lender receives your loan application he has 3 days to give you the GFE if the loan is approved. In the past the lenders simply provided a worksheet. Use the GFE to shop your mortgage You can go to three different lenders and apply for a mortgage. Get a GFE from each lender. Now you can compare the loans against each other. The objective of the GFE is to get borrowers to shop. And to do so, you have to compare apples to apples. Make sure the GFE is for real As a borrower you will be signing several documents. Ask the lender to point out the GFE and to go through the document with you. One number you will not find on the GFE is the "cash to close". This is the amount of money you have to bring to the table to close the deal. The closing agent will tell you the amount so that you can get a certified check. The GFE is only an estimate. The final closing costs will be different. For a sample of the official GFE form click on the link below: http://www.hud.gov/offices/hsg/ramh/res/gfes timate.pdf |