If you have ever purchased a home, you may have had a shock when you saw the total of the closing costs. Frequently, people may be tempted to re-negotiate their older, higher rate mortgage when rates come down. It is important to consider this carefully and be sure any savings you have are not eaten up by the closing costs on the loan.
You would anticipate that the lender to charge something for creating a new mortgage. Many of these expenses are not under the control of the bank, but are simply passed along to it. There are, however, some fees that the bank itself charges, and therefore can change. And they do change them. In certain lending markets, banks may eliminate application fees, for example, in order to generate more loan business.
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Or more, depending upon the state.
One of the first questions you may ask is whether or not you can reduce these costs. As we mentioned, there are times when lenders are aggressively seeking new clients, and they may have special programs where certain fees are waived. The application fee is the most often waived, since this is a charge the bank itself makes. Other fees, that are just pass-through fees, such as attorney fees or appraisal fees are not likely to be waived.
First of all, make sure the bank gives you a good faith estimate of these fees (they are required by law to do so.) Be careful that your bank has not offered you a great loan rate, but then padded the closing costs to such an extent that they recover the difference.
One of the best ways to get fees lowered is to learn the closing costs at your bank’s competitors and you can ask your bank to lower them if they are too high.
Now that you know how much you have to pay, you have to make sure it is worthwhile to re-negotiate your current loan. You can obtain a mortgage calculator on many sites on the net, and it will tell you how much the loan is going to cost over its life.
To the total cost of the new loan, be sure to add the closing costs, since you will not have them if you stay with your present mortgage. Now you can decide if it is worth re-financing your home.
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