Mortgage Refinancing

When someone goes to refinance any loan they need to look at costs associated with the loan. There is no such thing as a loan with no costs.

Most refinances puts the costs of the loan in the loan itself. For example let's say your home is worth $100,000. You want to borrow $85,000 to pay off your present mortgage and some credit cards. So the total amount being sent to creditors would be $85,000. However, the cost of the loan which is usually between 1% to 5% of borrowed amount.

When you go to the loan closing you will see the amount you have to pay back is higher than $85,000. As stated above your new loan balance will be $85,850 to $92,250. Possibly higher depending on the bank or mortgage company.

What are all the costs with a loan? Certain items can't be avoided like Title Insurance, Appraisal Fee and Recording Fees.

In my next couple posts I will go over each costs and what should be an average cost in different areas disclosed on your Good Faith Estimate.

Check back tomorrow for further details.