The Cost of a Refinance
With interest rates as low as they are, many people are refinancing their existing mortgage. The most common question we are asked is this: “How much money do I need to pay you if I want to refinance?’ Here’s all you need to know about the cost of a refinance.
The closing costs for a refinance transaction are the same as they are for a purchase transaction. If you use us as your lender, it won’t be very much – about $2,400 if you need an appraisal, and about $1,900 if you don’t need an appraisal.
However, the only money you will have to pay up-front is the cost of the appraisal, with is typically $500. The rest of the closing costs (and any points you pay to get an even lower rate) can be included in the new loan amount, so you won’t need to pay anything else besides the money for the appraisal.
Regarding the need for an appraisal, when we run a loan file through the underwriting software, the software tells us if we need to order an appraisal. If the appraisal database that Fannie Mae and Freddie Mac maintains shows that your property has a sufficient value, we will not need an appraisal. In that case, you will not need any money before or at the closing – all of the costs can be included in the new loan amount.
Reasons to Refinance
With rates as low as they are right now, it’s often a very good financial decision to refinance. Some of the more common reasons to refi are:
- Lowering your payment
- Getting rid of mortgage insurance
- Consolidating high-interest loans (credit cards, personal loans, lines of credit, etc.) into your low-interest rate mortgage
- Getting rid of your variable rate loans by locking into a new, fixed rate mortgage
- Taking cash out to pay for extraordinary expenses (college, vacations, etc.)
If you would like to save some money every month, contact us and we’ll show you how much you can save. And remember, the only money most people have to pay to refinance is the cost of the appraisal.
You also get to skip a payment and you will get a refund of the money that’s in your current escrow account!