Question by Bigsky_52: Do you have to pay any closing costs when you refinance your home?
I’ve been in my home for about a year, and with the fed cutting interest rates I’ve been thinking about trying to consolidate my two loans into one low interest mortgage. I’ve got 25% through Chase at 8.75% and the remaining 75% through Wells Fargo at 6.25%. I’m thinking about refinancing, but am wondering if I’d have to pay closing costs again. Does anybody know about the process involved? Thanks.
Answer by Nancy Kay
yes, you will have costs associated with the new loan closing, such as appraisal, lender fees, title and escrow costs, unless you are able to qualify for a “no cost” refinance program, of which there are fewer and fewer these days, and they often increase the interest rate to compensate for no closing costs up front.
What do you think? Answer below!
Unfortunately you will have to pay closing cost. If you are refinancing with the same company that currently holds your mortgage I think its ridiculous to pay the fees (can run into several thousand dollars) but that’s the way the game is played. Remember they will only refinance up to 80% of the value of the house. If you happen to be in an area that has seen dramatic drops in home value, it could be an issue. Make sure to shop around for the best rate.
Yes, you have to pay closing costs REGARDLESS of what they tell you.
You’ll either pay it in a rate hit, out-of-pocket, or they will roll it into the mortgage…but it will be there.
You will get a Good Faith Estimate and a TIL, just like you did with your original loan that will spell out the terms.
Here is the rule of thumb:
1. Make sure that you are beating your interest rate by a minimum of 1%.
3. Check for a prepayment penalty first.
3. Make sure that your monthly savings outpace the closing costs to ‘recoop’ in no more than 36 months, or it’s not worth it.
For example, if your combined monthly payment is $ 1,000 per month, and your NEW mortgage payment will be $ 850 per month, and let’s say your total closing costs are $ 3,000…you take the $ 3,000 and divide by the $ 150 per month savings…the figure that pops up on your calculator should be 36 or less.
Make sure you are also, planning on being in the home for longer than the number of months that pops up on the calculator…or else you have refinanced for nothing, and it’s just money flushed down the toilet.
usually yes, some on the web don’t charge but I would never do business with anyone re-financing my home that I could not sit & talk to in person