 It is also important to add up all costs involved before you submit your refinance home loan package. Again, the payment may go down as a result of your refinance but you need to calculate how many months it will take you to recover the cost of the refinance.
For example, if it's going to take 5 years to recover the cost but you are planning to move in 3 years, you may want to reconsider.
Of course, if your purpose in submitting a refinance home loan package is to get some cash out, that would take precedence over the above calculations.
The various costs of a refinance home loan closing are almost the same as a purchase mortgage except that you won't have transfer taxes or a new title insurance policy for yourself. You will need a new title policy for the new lender however. Here is a list of the most likely fees.
 APPRAISAL FEE
This fee covers the costs of an independent appraisal of your home for your lender's use.
LOAN ORIGINATION FEE
This fee covers costs associated with processing your mortgage application and completing your loan.
DISCOUNT POINTS
Discount points are essentially prepaid finance charges paid when you close your loan, usually to obtain a mortgage with a lower interest rate. Lenders offer a number of mortgages with different combinations of interest rates and discount points; the higher the interest rate, the fewer the discount points. One point equals 1 percent of the value of the mortgage (for example, $2,000 on a $200,000 mortgage).
CLOSING AGENT AND REVIEW FEES
These fees are for the services of the closing agent who actually conducts the closing. There may also be charges for other legal services involved in completing your loan.
PREPAYMENT PENALTIES
Some mortgages charge a penalty for paying off the loan before a certain term is up. While this practice varies by state, type of lender and type of loan, prepayment penalties can be quite substantial and sometimes surprising. The mortgage note for your existing loan will tell you if you have a prepayment penalty.
OTHER COSTS
Depending on your mortgage, you could have fees for a VA loan guarantee, FHA or private mortgage insurance, and a variety of other possible closing costs..
WHAT NEXT?
If you're currently looking to refinance home loan, talk to a Cherry Creek loan officer before you make your final decision. As you can see, there are a many factors to weigh and we can help choose the best refinancing option for you. Call us at 800-325-2062.
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