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Estimated Closing Costs Don't Have to be a Mystery When Refinancing Your Mortgage

by Gabriel  Traverso
Mortgage Directory Columnist

When refinancing your mortgage there is a long laundry list of potential costs and fees attached. How do you get a handle on your estimated closing costs so you know what to expect?

Mortgage Refinancing Closing Costs

When you decide to refinance your mortgage, be prepared to pay some fees (between 3% and 6% of the mortgage) before you're done. Typically, the cost of your refinance includes the following:
  • Lender fees. Flat fees charged by the mortgage lender to cover the cost of funding the loan.
  • Points. To lower your interest rate (and your monthly payment), you buy points (each point = 1% of your mortgage balance) when you close your mortgage.
  • Escrow. Money held for you by the bank to pay certain expenses (for example, property taxes, PMI, or flood insurance).
  • Title fees. Cover the cost of searching to make sure no one else has a legal claim to your home.
  • Appraisal fees. Cover the cost of an appraiser to determine your home's value.
  • Credit check fees. Cover the cost of running a credit check.
  • Insurance. Proof of homeowners' insurance and if you have less than 20% equity in your home when you refinance, you must also pay private mortgage insurance (PMI).
  • Property taxes. These taxes can be included in your monthly mortgage payment. Also tax balance owed can be included.
You can negotiate some fees while others are non-negotiable.

Estimated Closing Costs: There Doesn't Have to be Any Guessing

When you sit down to speak with your lender or mortgage broker about refinancing they check your credit. Based on that information, they offer you a rate and terms for your refinance. Rather than wonder about the closing costs, make sure they give you an itemized list. With points, get the points as a dollar figure so you know exactly what you have to pay. Go over your closing costs carefully and ask questions. Finally, don't hesitate to ask your lender which fees they can reduce or eliminate.

About the Author
Gabriel Traverso is a freelance writer, independent musician, and artist. He resides in Reno, NV.

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