Mortgage Refinancing
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Refinancing of mortage can meaningly reduce mortage installment. Replacing of mortgage to lower interest loan, changing the term of loan, or consolidating all loans into one new loan can reduce costs of home loan.
Refinancing can be worthwhile, but it does not make financial sense for everyone. There are a number of items to consider, such as how long you plan to stay in the house. Most sources say that it takes at least 3 years to fully realize the savings from a lower interest rate, given the costs of the refinancing.
Refinancing does not make financial sense for everyone, but it can be a good idea for homeowners who:
- Have an adjustable mortgage rate and want a fixed-rate loan to have the sureness of knowing the mortage payment.
- Want to build up equity more rapidly by converting to a loan with a shorter term.
- Want to draw on the equity built up in their homes to get money for a prior purchase.
How much is Refinancing?
Costs may be vary significantly from area and lender, so I can only estimate it.
- Application fee $75 - $300.
- Survey Costs $125 - $300.
- Appraisal Fee $150 - $400.
- Lender’s Attorney’s Review Fees $75 - $200.
- Homeowner’s Hazard Insurance $300 - $600.
- Title Search and Title Insurance $450 - $600.
- Home Inspection Fees $175 - $350.
- Mortgage Insurance 0.5% - 1.0%.
- Loan Origination Fees 1% of loan.
- Points 1% - 3%.
- Prepayment Penalty.
So I can estymate that paying will be an average of 3 - 6 % of the outstanding principal in refinancing costs, plus prepayment penalties and the costs of paying off second mortages if it exists.
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