Refinance rates can amount to several thousand dollars; especially if homeowners are consolidating two or more home loans. While mortgage refinance can ultimately save borrowers a considerable amount of money over the term of the note, it is imperative to compare lenders to obtain the lowest rate of interest and avoid unnecessary fees.
Numerous refinance rates can be assessed. These costs can range from less than $100 to more than $2500. Banks typically charge refinance fees for new loan applications, credit reports, preparation of loan documents, home appraisals and inspections, lawyer review, and closing costs.
Many borrowers do not realize that their original home mortgage loan may include a prepayment clause for paying off their loan early. Not all mortgages include prepayment penalties. Government backed loans and home mortgages secured through credit unions are prohibited from including penalties for early payoff.
Other lenders assess prepayment penalties only during the first two to three years of the loan. Therefore, borrowers should carefully review their mortgage contract or call their lender to verify penalty amounts prior to shopping for mortgage refinancing.
Several mortgage comparison websites exist which allow borrowers to use mortgage refinance calculators to determine overall savings. One of the most comprehensive websites for mortgage loan and refinance comparison is MortgageLoan.com.
Homeowners can enter the amount of their original mortgage loan, interest rate, term of the note, number of payments made, PMI mortgage insurance, annual property taxes, annual home insurance, and appraised property value, along with the refinanced mortgage amount, interest rate, term and closing costs. After entering home loan value and fees, borrowers can easily see overall savings to determine if mortgage refinance makes good financial sense.
If homeowners decide to continue their quest toward home loan refinancing, the next step involves contacting lenders to obtain a good faith estimate. Mortgage lenders assess the current home mortgage loan and provide borrowers with an estimate of refinance costs. The good faith estimate only covers costs incurred by the lender. Costs from third-party service providers, such as home appraisals or home inspections are not included in lender estimates.
Home appraisals are used to determine the home's current market value. Some lenders allow borrowers to include appraisal fees into the refinanced mortgage, while others require borrowers to pay the fee out of pocket. Home appraisal fees generally range between $300 and $700.
Mortgage lenders generally require borrowers to obtain a home inspection prior to refinancing mortgages. This is particularly true if the original loan has been in place for five or more years. Home inspections are necessary to analyze the structural condition of the property and to test the water supply or septic system. On average, home inspection fees cost between $150 and $400.
Additional refinance rates include loan application fees, loan origination fees, points, title insurance and property records search, title insurance, survey fees, flood monitoring and flood certification.
In order to refinance mortgages, borrowers must undergo the same loan application process as when they first purchased the home. The refinancing process requires homeowners to undergo a financial audit to obtain loan approval. Additionally, homeowners must be financially prepared for refinance rates.
Many factors are involved with mortgage refinance. We invite you to learn more about the process and understand how lenders calculate refinance rates by browsing our mortgage refinance article library. Here you will find information to help you make an informed decision and locate resources to obtain the best mortgage refinance rates.
Published on May 27, 2010 at 02:41 AM