When people see that the interest rates of mortgage loans are lower than the interest rate of the loan they have, they get an itch to complete a refinancing of their home mortgage loan. Refinancing a mortgage loan can save you money especially if the interest rate is lower than what your home mortgage loan interest rate is currently. While saving does exist there are times when refinancing a home mortgage loan is not always the best way to save money. Borrowers tend to forget the costs of a new home mortgage loan, and only consider the savings generated by the lower interest rates. If a borrower intends to sell their home quickly after they refinance the mortgage loan the savings might not cover the cost of refinancing a home mortgage loan.
Refinancing a home mortgage loan can cost as much as the original mortgage loan. Refinancing a home mortgage loan can include fees for: appraisal, closing costs and processing fees. An example of the prices of these fees include:
* Licensed appraisal fee: $250 – $600
* Loan application fee: $75 – $300
* Land survey fees: $124 – $300
* Attorney’s fees: $75 – $200
* Title search and insurance: $400 – $600
The Cost of Refinancing a Mortgage Loan
Closing costs are usually 3% – 5% of the current home value, and sometimes the borrower will choose to place the closing costs at the back end of the refinanced mortgage loan. But, doing this will increase the total cost of the loan and the borrower will pay more for the closing costs in the long run due to accrued interest. Other factors need to be taken into thought before refinancing your home mortgage loan. Is your home currently worth less than you owe on your home mortgage loan? If so you will find it very difficult to refinance your home mortgage loan. Do you have a large remaining balance on your mortgage loan? Usually the higher the remaining balance, the more it will cost to refinance your home mortgage loan.