??? about cost of refinancing

[jessica52877]

We were looking into refinancing our house and it is going to cost us $8000 to do so. This seems extremely high to me. Am I wrong? I have no experience with this type of thing and I have been trying to do my homework.

I am not sure of the cost breakdown, but have copies of I think most of the papers if you give me a heads up what to look for. I'll be happy to post.

Do you need the amount of the loan?

 

[crjack]

That seems very high. Are you reducing your rate, length of loan, ???

For that amount of $$$ you want to make sure you can recoup those costs.

 

[minnie1928]

Totally depends on a lot of factors...are you paying points, closing early in the month, escrowing?

 

[arielsleepingbeauty]

That does seem kind of high, but i am not an expert either. I have refinanced before and only one time i had to pay. I did not have to pay anything when i refinanced through the same bank.
I just refinanced my new home last year after living there for one year, but i had to. I was going to get a rate that was 2% less than what i was currently paying. I had to pay closing costs which was the lawyers fee, my taxes, one year of homeowner's insurance and also i had to pay the difference of what it was if i didnt want to pay PMI. My house had lost value within the one year since i bought it and the amount i was refinancing for was within the 20%. I really dont know how to explain it that well.

 

[jessica52877]

Our rate will go down about 2%, combining two loans into one (we had a piggyback loan).

Going from a 30 year and 20 year (but only have left 21 and 16 years) to a 15 year.

Not paying for any points.

No idea when we would close, I have been told it doesn't matter. Is this not true?

Escrowing? Not sure exactly what you are asking and feel like I should. We will have escrow from our current loan that we are cut a check for. So I guess we will be adding that amount into the new then and maybe that is part of the fee. Going to try and figure that out.

 

[jessica52877]

It will be 3 years before we break even, the amount left to pay off the house would be the same if we did not switch loans vs if we did. So 3 years to make up the $8000.

I don't see how this wouldn't be wise in the long run, but I just think it could be done for less.

 

[jessica52877]

Appraisal Fee 400.00
Flood Certification 16.00
Mortgage Insurance Premium 2,537.50

Title services and lender’s title insurance 1,076.96

Government recording charges 56.00

Transfer taxes 474.11

Initial deposit for your escrow account 1,240.02

Daily interest charges 272.84 (15 days)

-------------------------------------------

Then Your Adjusted Origination Charges

Our origination charge 7,494.02
then I don't understand how the credit was figured out but -4,573.65
making my adjusted origination charges 2,920.37

The person is trying to tell me often that it isn't costing me any $$ because I am not paying him OOP. It is being rolled into the loan. That is still paying for it and he seems to not understand it. No one will ever convince me otherwise!

 

[minnie1928]

Our rate will go down about 2%, combining two loans into one (we had a piggyback loan).

Going from a 30 year and 20 year (but only have left 21 and 16 years) to a 15 year.

Not paying for any points.

No idea when we would close, I have been told it doesn't matter. Is this not true?

Escrowing? Not sure exactly what you are asking and feel like I should. We will have escrow from our current loan that we are cut a check for. So I guess we will be adding that amount into the new then and maybe that is part of the fee. Going to try and figure that out.

Closing date does make a difference. When you close on the loan, you will be pre-paying the interest on the loan amount from the date of your closing to the end of the month. So, for example if your loan costs $50/day in interest and you close on the 20th, you would have 10 days @ $50/day to pay. If you push your closing to the 28th, then you would only pay $100 at closing.

Escrow is what they hold to pay your real estate taxes and homeowners insurance. So, if you currently escrow then you'll get a check refunding you the balance in your account. If you are refinancing with a different bank than the one you currently have a mortgage with, then they are probably requiring you to pay 3 months of taxes and 3/12th of your homeowners premium. I did this last year and it took several weeks to get my refund from the first escrow account. So, I had to "front" the money at closing.

 

[elgerber]

Appraisal Fee 400.00
Flood Certification 16.00
Mortgage Insurance Premium 2,537.50

Title services and lender’s title insurance 1,076.96

Government recording charges 56.00

Transfer taxes 474.11

Initial deposit for your escrow account 1,240.02

Daily interest charges 272.84 (15 days)

these are all solid costs. This appears to be an FHA loan, and an appraisal on an FHA is usually $400, the MIP is a government fee that must be paid on all FHA's, and is not negotiable.
Daily interest charge, is the interest on your loan from the day you close until the end of the month.
Transfer taxes, are a state fee that is charged on all loans.
Recording charges, charged by the county to record your mortgage.
Flood certs must be pulled on all loans, and they cost $16.
Escrow deposit, that is your taxes and insurance, they must have enough in your account to pay them when they come due. This also must be paid, it cannot be waived on an FHA. HOWEVER, you will recieve a refund from your current mortgage lender after closing for whatever your current escrow balance is.
Title fees are the fees the title company charges.
So, these are all basic required fees, I don't see any charges that are actually for the lender here, no points or origination fee.
Can you tell I do this for a living LOL?

 

[Jex]

I used to work for a mortgage company, with that being said go to your bank. There is no reason you should be paying origination. Is this through a broker?

 

[jessica52877]

Closing date does make a difference. When you close on the loan, you will be pre-paying the interest on the loan amount from the date of your closing to the end of the month. So, for example if your loan costs $50/day in interest and you close on the 20th, you would have 10 days @ $50/day to pay. If you push your closing to the 28th, then you would only pay $100 at closing.

Escrow is what they hold to pay your real estate taxes and homeowners insurance. So, if you currently escrow then you'll get a check refunding you the balance in your account. If you are refinancing with a different bank than the one you currently have a mortgage with, then they are probably requiring you to pay 3 months of taxes and 3/12th of your homeowners premium. I did this last year and it took several weeks to get my refund from the first escrow account. So, I had to "front" the money at closing.

After I pulled up my statement and saw 15 days and the interest I figured that would be the difference. That was just an estimate to give us a price so I see now how it could cost even more (or less).

Thanks about the escrow. I knew what it was for but unsure of what you meant exactly. I forgot some people don't do that. We just always have. Now it makes sense.

these are all solid costs. This appears to be an FHA loan, and an appraisal on an FHA is usually $400, the MIP is a government fee that must be paid on all FHA's, and is not negotiable.
Daily interest charge, is the interest on your loan from the day you close until the end of the month.
Transfer taxes, are a state fee that is charged on all loans.
Recording charges, charged by the county to record your mortgage.
Flood certs must be pulled on all loans, and they cost $16.
Escrow deposit, that is your taxes and insurance, they must have enough in your account to pay them when they come due. This also must be paid, it cannot be waived on an FHA. HOWEVER, you will recieve a refund from your current mortgage lender after closing for whatever your current escrow balance is.
Title fees are the fees the title company charges.
So, these are all basic required fees, I don't see any charges that are actually for the lender here, no points or origination fee.
Can you tell I do this for a living LOL?

LOL! I could tell when you were whipping these things out. I guess their cost is under the Adjusted Origination Charges.

So if all of those are fixed costs then I guess it isn't so bad.

We did not have an FHA loan before but that is what this one would be. Is there a positive or negative to one? DH just said they'll let you finance more $$$. I am interested to see what our appraisal comes in at also. It seems most of the houses around here have held their value, but we have a finished basement (I think this would add to it) and an inground pool (not sure what that will do $$ wise). I only have the house down the street to compare with.

We also didn't pay PMI before, thus the reason for the piggyback loan.

 

[minnie1928]

Appraisal Fee 400.00
Flood Certification 16.00
Mortgage Insurance Premium 2,537.50

Title services and lender’s title insurance 1,076.96

Government recording charges 56.00

Transfer taxes 474.11

Initial deposit for your escrow account 1,240.02

Daily interest charges 272.84 (15 days)

-------------------------------------------

Then Your Adjusted Origination Charges

Our origination charge 7,494.02
then I don't understand how the credit was figured out but -4,573.65
making my adjusted origination charges 2,920.37

The person is trying to tell me often that it isn't costing me any $$ because I am not paying him OOP. It is being rolled into the loan. That is still paying for it and he seems to not understand it. No one will ever convince me otherwise!

Whoa! That origination charge looks big! You say that you aren't paying points, correct? Have you tried other lenders to see how their rates/fees are?

Also, the Mortgage Insur Prem....does that mean that you have less than 20% equity in the house?

 

[jessica52877]

I used to work for a mortgage company, with that being said go to your bank. There is no reason you should be paying origination. Is this through a broker?

Yes, it is through a broker.

After just asking DH about the loans he said something about Keybank (one of our mortgage companies) having to agree to something?? Of course he has no idea and can't give me any more details because he said he didn't know and understand. He is more likely to say okay to something where I'll start asking the questions. I don't understand why we would have to get permission from either mortgage company if we are paying them off with the new loan.

He also said he spoke with someone else who said they wouldn't combine the two loans. And was wondering if the bank would.

 

[elgerber]

After I pulled up my statement and saw 15 days and the interest I figured that would be the difference. That was just an estimate to give us a price so I see now how it could cost even more (or less).

Thanks about the escrow. I knew what it was for but unsure of what you meant exactly. I forgot some people don't do that. We just always have. Now it makes sense.



LOL! I could tell when you were whipping these things out. I guess their cost is under the Adjusted Origination Charges.

So if all of those are fixed costs then I guess it isn't so bad.

We did not have an FHA loan before but that is what this one would be. Is there a positive or negative to one? DH just said they'll let you finance more $$$. I am interested to see what our appraisal comes in at also. It seems most of the houses around here have held their value, but we have a finished basement (I think this would add to it) and an inground pool (not sure what that will do $$ wise). I only have the house down the street to compare with.

We also didn't pay PMI before, thus the reason for the piggyback loan.

You are correct, you can mortgage a higher amount on an FHA these days, they are more lenient also with debt to income ratios. Paying off two loans with one is most often viewed as a cash out loan which results in a higher rate conventional. But not with FHA. In general FHA rates are also running a big lower these days.
You will have an MI payment though, but even with that, it sounds like it could still be saving you some money.

Whoa! That origination charge looks big! You say that you aren't paying points, correct? Have you tried other lenders to see how their rates/fees are?

Also, the Mortgage Insur Prem....does that mean that you have less than 20% equity in the house?

It's hard to say if that's a big charge or not, when we don't know the balance of the loan. Average origination here is 1% and that is where the lender makes their portion of the money. So, if it's 1% then it's pretty normal. If the loan amount is quite low though, then it's not so great.

 

[jessica52877]

Whoa! That origination charge looks big! You say that you aren't paying points, correct? Have you tried other lenders to see how their rates/fees are?

Also, the Mortgage Insur Prem....does that mean that you have less than 20% equity in the house?

Yes, less then 20% they assume, appraisal was done yesterday (in about 5 minutes). Currently owe $138,000. It would have to come in around $180,000 to get rid of that.

No points. I actually asked this question because I think it is high and want to call someone else. I don't want everyone checking our credit. Our scores are quite high and I don't like them dinged. I also don't appreciate that he pulled mine when I am going to have nothing to do with the loan. I wasn't on it 10 years ago (when I wanted to be) and refuse to be added now!

DH did talk to one other company and they said they would not combine the loans. One is for $96,000 and the other $42,000.

And I gotta say, this board is the BEST! Thanks!

 

[jessica52877]

It's hard to say if that's a big charge or not, when we don't know the balance of the loan. Average origination here is 1% and that is where the lender makes their portion of the money. So, if it's 1% then it's pretty normal. If the loan amount is quite low though, then it's not so great.

Looks like is a little more then 2% then.

 

[minnie1928]

Yes, it is through a broker.

After just asking DH about the loans he said something about Keybank (one of our mortgage companies) having to agree to something?? Of course he has no idea and can't give me any more details because he said he didn't know and understand. He is more likely to say okay to something where I'll start asking the questions. I don't understand why we would have to get permission from either mortgage company if we are paying them off with the new loan.

He also said he spoke with someone else who said they wouldn't combine the two loans. And was wondering if the bank would.

That sounds like they need to get permission from your second mortgage to agree to be subordinate to the first mortgage (the refi mortgage), but I don't know why that would be needed if the loans are both being paid off with the refinance and wrapped into one loan. Subordination is legalese for the order of lien holders in the event of default. Basically, if they foreclose and sell the house the first mortgage gets paid first and the second is paid last.

If you are not going to be on the mortgage then why are they pulling your credit? To me it sounds like they are putting you on the application as well.

 

[jessica52877]

That sounds like they need to get permission from your second mortgage to agree to be subordinate to the first mortgage (the refi mortgage), but I don't know why that would be needed if the loans are both being paid off with the refinance and wrapped into one loan. Subordination is legalese for the order of lien holders in the event of default. Basically, if they foreclose and sell the house the first mortgage gets paid first and the second is paid last.

If you are not going to be on the mortgage then why are they pulling your credit? To me it sounds like they are putting you on the application as well.

Thank you for that explanation. I guess if we only refinanced one then that would come into play.

The broker guy I guess thought I was going on the mortgage. He had my name on everything. I had spoken with him probably 3 hours before and told him I was not, but he didn't change it. I guess he had already pulled my credit by then. It was nice to rub in hubby's face that I had a 798 though! DH just gave him my social when he asked for it. Didn't ask why he wanted it.

 

[ssawka]

$8000 seems a little high, but not outrageous. I think we paid about $6K-$7K last year when we refinanced, and that was through our credit union.

As far as not paying the fees because there being rolled in, that depends. Are you planning on staying in the house until it's paid off? Is the refinance going to extend the term? Will your payments increase? If you will have the same monthly payment over the same term then essentially you won't be paying the fees, but you will owe more money so if you sell before maturity then it will come out of your sale price. That's how I look at it, although others would argue that you are paying the fee because your payments could be lower if you didn't have to pay the fee.

 

[BrettS]

The broker guy I guess thought I was going on the mortgage. He had my name on everything. I had spoken with him probably 3 hours before and told him I was not, but he didn't change it.

The rules vary from state to state, but it's my understanding that in some states you will be required to be on the mortgage no matter what since you're married to your husband. Additionally, if both you and your husband work, but his income isn't enough to qualify for the mortgage on his own then you would be required to be on the mortgage. Finally, if your name is on the deed to the house, but you aren't required to be on the mortgage you will still need to be present at closing and sign some paperwork acknowledging that you are aware that your husband is taking out a mortgage against the property that you own.