It is always possible to cut house refinancing costs but you must do your homework. As you know when you first took out your mortgage loan, there are a variety of fees that are charged during the process. The good news is that many of the fees associated with house refinancing can be reduced or cut all together.
Closing costs on mortgage loans, whether it is for the purchase or for house refinancing, an easily run into the thousands of dollars. If you roll the costs into the loan, you could end up paying a great deal more in the long run because of the interest. It literally pays to learn all you can about the fees associated with your loan.
Your lender is required to give you a good faith estimate within three days that discloses all costs associated with the loan. Be sure to review this estimate closely and ask your lender about any fees you don't understand.
Types of fees
There are many fees associated with house refinancing such as:
|• Appraisals ||• Attorney fees ||• Credit
report ||• Application |
|• Underwriting ||• Rate
lock ||• Documentation ||• Filing |
|• Surveys ||• Title search ||• Title
|• Discount points
The differences in fees
One of your first priorities is to determine which fee is strictly fee income for the lender and which fee involves payment to a third party. Your lender will be much more willing to negotiate on the fees that are fee income to them. It is unlikely you will be able to reduce a fee where the lender is simply the middleman and the fee is actually paid to someone else.
Fees that are typically fee income for the lender include application, documentation, underwriting and origination fees. But keep in mind that these costs help the lender cover the expense of their time in processing the loan. Some of these fees are necessary and just a cost of doing business. However, it is still possible to negotiate these fees particularly if you are armed with lower fees from a different lender.
The lender usually has the most leeway with origination fees and points. These fees can vary widely by lender and are stated as a percentage of the total loan amount. Even a half point reduction in one or both of these fees can result in hundreds of dollars, if not thousands, saved.
Negotiate your fees
One of the best ways to have an edge when you are refinancing your mortgage is to get quotes from multiple lenders. Being armed with this information can help you negotiate with your lender. If there's the possibility that they will lose the mortgage over a $500 fee, most lenders will do what it takes to keep your business. But beware of those who subtract one fee and then add another to make up the difference.
There can be a dramatic difference in these fees from lender to lender. Some may even call the fee by a different name. Perhaps the best way to negotiate is to add up all of the fees for each of your quotes. Take the house refinancing loan with the lowest fees to the lender of your choice and ask them if they can beat it. Be sure your rate is equal or better to the other loan as well.
Be sure to let those quoting rates and fees know that you are shopping for the best mortgage or house refinancing option. Just the knowledge that you will be obtaining other quotes may entice the lender to give you the best deal upfront.
If you feel there is room for negotiation, don't be afraid to ask. Your lender is not going to voluntarily lower fees if you seem satisfied with the proposal. Speak up and your pocketbook or wallet could be thanking you at closing.
Many people fail to try to cut costs for their loans as they assume there is no room for negotiation. In almost all instances, there can be some sort of fee reduction made. Be sure to prepare yourself through research and information before visiting lenders to discuss your house refinancing loan. The more knowledgeable you are, the more likely you are to save money.