How To Calculate the Costs of Refinancing Your Home

The cost of refinancing your home can vary depending on the loan amount, jurisdiction, points, lending institution, and whether you refinance with your current mortgage holder.  A good resource for estimating refinancing costs is the closing statement from your original purchase.

If you're moving from one lender to another and your original loan is less than ten years old, your refinancing costs will be approximately the same as your original closing costs.  Some costs may have gone up while points should be lower.  The best way to calculate refinancing costs in this instance is to review the closing statement from your original purchase and adjust line item amounts according to any new information available.  Add the cost of points if you're buying down the interest rate and the cost of an attorney to review documents with you.

If you'll be refinancing with a new lender and your current mortgage is over ten years old, your original closing statement may not be as helpful.  In this case it will be necessary to estimate.  Based on national averages, total costs range between 2% and 3%.  On a $200,000 home refinancing loan expect to pay $4000 to $6000 up front.  Within that range you will probably pay an application fee, loan origination fee, title insurance, document processing fees and possibly points to buy down the interest rate.  Additionally your state or local jurisdiction may impose transfer or filing fees.  You may also be required to pay for an inspection and new survey (a substantial cost on rural acreage).

If you're refinancing with the lender who holds your current mortgage, again you can start with your original closing statement.  It is unlikely that you will have to pay again for title insurance, survey, or inspection fees.  Other customary lender fees may be waived as well.  Even though you're dealing with a familiar lender it's still a good investment to pay an attorney to review documents with you before closing.

A good estimate of total costs is necessary in order to determine the immediate impact on your personal finances and to compare lenders, but it's also important to determine the monthly cost over the expected life of the loan.  Divide total refinancing costs by the number of months you expect to pay on the loan, and subtract that from monthly interest savings to see if home refinancing is for you.


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