Mortgage Calculator Refinance

When you apply for your first mortgage, you understand that there are quite a few fees associated with the loan. You may have even been able to roll many of these closing costs into your final mortgage loan.  Not anymore!  With so many changes being made to the lending process in recent months, many homeowners are shocked to learn that the 3-10% closing costs fees they incurred when they first purchased their homes will be charged to them again when they refinance – and this time they’ll have to pay those fees in cash!

Getting a mortgage costs a lot of money.  From administration fees, application fees, appraisal fees and even title search fees, the cost of refinancing sure can add up.  With so much money at stake, you may be wondering what all of those fees are really for.

In case you are confused by the multitude of financing fees being tacked onto you bill, here is a rundown of the basics. But remember, every lender has their own fee structure and some charge more for different items than others; while other stack on substantial fees for other things that another lender offers free of charge.

Application Fee

Usually costing between$300-$600, your application fee is just that; a fee charged to you for simply applying for the loan in the first place.  In some instances, this fee may be returned to you if your loan is denied, but in most cases it is not.

Arrangement Fees

Arrangement fees are a type fee charged by your broker or lender to help you secure the absolute best interest rate.

Broker Fees

This is a fee charged by an individual broker for his service sin finding you a great deal and handling the mortgage refinance transaction. When dealing with the lender directly, this fee is not charged.

Private Mortgage Insurance (PMI)

Private Mortgage Insurance (PMI) is a monthly fee charged to mortgages with less than 20% equity in order to ensure payment should the borrower default on the loan.  A few things to understand about PMI is:

• it can be paid upfront (usually 1% of the total house cost), and added to your mortgage, which may be cheaper in the long run.
• It can be cancelled once you have at least 20% equity in your home
• Is required by almost every lender nowadays.

Appraisal Fees

Most lenders now require that your home be worth at least 20% more than the loan amount.  This value must be obtained by having a formal appraisal done on the property.

Other Mortgage Fees and Charges

There are a number of hidden account fees that some lenders charge mortgage borrowers in order to complete their loan.  Some are quite small but added together can cost you a bundle.  Here are just a few of the fees most lenders charge mortgage applications these days:

• certificate of interest paid
• consent to charge borrower priority
• consent to second charge
• data protection act fee
• deeds access
• property insurance
• duplicate statements
• extend/reduce mortgage term
• information request from title deeds
• legal documentation approval charge
• lender’s reference charge
• mortgage account illustration fee
• mortgage discharge fee
• mortgage product transfer fee
• photocopies of documents/deeds
• property insurance substitution charge
• questionnaire charge
• repayment basis charge
• revaluation charge
• sale of part security
• tenancy consent
• title conversion
• arrears administrative charge (monthly)

With so many different charges added to your refinancing bill  you may be wondering if you will save any money in the end.  That is a good question that should be looked at closely to ensure that refinancing your mortgage really is the best deal for you at the moment.  In some cases, holding onto the loan you have really makes more sense.

Be sure to compose all of the costs and fees associated with your new loan with the overall savings to be certain that refinancing is your best option.  In addition, be sure to compare each lender’s specific fee structure and their interest rates to see what comes out the cheapest.

In some cases, taking a slightly higher interest rate may make sense if the lender’s fees are exorbitantly high.

There are some ways to get a break on some of these refinancing fees. Here’s how:

• Avoid working with a broker.  If you have time to count out your own deals than by all means save yourself those broker’s fees and secure your own loan.  Tip: remember, just because you find a good deal online does not mean it is broker free or broker fee free.  Only working directly with a lender will save you these costs.
• Try and strike a deal with your current lender.  Oftentimes your current lender will cut a lot of their fees in order to keep your business – some may even pay your closing costs for you!
• Shop around.  As already stated, not every bank charges the same fees for their mortgage services.  Shop around to find the bet deals for your new loan.