Do you have to pay any closing costs when you refinance your home?
Bigsky_52 asked:
I’ve been in my home for about a year, and with the fed cutting interest rates I’ve been thinking about trying to consolidate my two loans into one low interest mortgage. I’ve got 25% through Chase at 8.75% and the remaining 75% through Wells Fargo at 6.25%. I’m thinking about refinancing, but am wondering if I’d have to pay closing costs again. Does anybody know about the process involved? Thanks.
Clarence
I’ve been in my home for about a year, and with the fed cutting interest rates I’ve been thinking about trying to consolidate my two loans into one low interest mortgage. I’ve got 25% through Chase at 8.75% and the remaining 75% through Wells Fargo at 6.25%. I’m thinking about refinancing, but am wondering if I’d have to pay closing costs again. Does anybody know about the process involved? Thanks.
Clarence
May 23rd, 2009 at 4:43 pm
Milton
yes, you will have costs associated with the new loan closing, such as appraisal, lender fees, title and escrow costs, unless you are able to qualify for a “no cost” refinance program, of which there are fewer and fewer these days, and they often increase the interest rate to compensate for no closing costs up front.
May 26th, 2009 at 10:49 am
Karl
First of all, you would have to make sure your home is still worth what you owe. If you took out a 100% mortgage a year ago then it probably is not.
Secondly, the fed rate cuts have nothing to do with long term mortgage interest rates and will not affect them.
Lastly, the answer to your question is yes, you would have to pay closing costs again unless you do a “no cost refi”, in which case your rate would be higher than if you payed for closing.
I would suggest that your first step in your decision making process would be to get an evaluation of the value of your home. If my suspicions are correct, you may not be in a position to refi anyway.
May 29th, 2009 at 8:09 pm
Jamie
Unfortunately you will have to pay closing cost. If you are refinancing with the same company that currently holds your mortgage I think its ridiculous to pay the fees (can run into several thousand dollars) but that’s the way the game is played. Remember they will only refinance up to 80% of the value of the house. If you happen to be in an area that has seen dramatic drops in home value, it could be an issue. Make sure to shop around for the best rate.
June 2nd, 2009 at 1:30 am
Pamela
Yes, you have to pay closing costs REGARDLESS of what they tell you.
You’ll either pay it in a rate hit, out-of-pocket, or they will roll it into the mortgage…but it will be there.
You will get a Good Faith Estimate and a TIL, just like you did with your original loan that will spell out the terms.
Here is the rule of thumb:
1. Make sure that you are beating your interest rate by a minimum of 1%.
3. Check for a prepayment penalty first.
3. Make sure that your monthly savings outpace the closing costs to ‘recoop’ in no more than 36 months, or it’s not worth it.
For example, if your combined monthly payment is $1,000 per month, and your NEW mortgage payment will be $850 per month, and let’s say your total closing costs are $3,000…you take the $3,000 and divide by the $150 per month savings…the figure that pops up on your calculator should be 36 or less.
Make sure you are also, planning on being in the home for longer than the number of months that pops up on the calculator…or else you have refinanced for nothing, and it’s just money flushed down the toilet.
June 2nd, 2009 at 3:11 am
Lauren
usually yes, some on the web don’t charge but I would never do business with anyone re-financing my home that I could not sit & talk to in person