Refinancing your home loan.
Everyone knows, doing some research can save you hundreds of dollars. But many a times, as you might have experienced - you have to spend plenty of time searching information on internet before you get to the most useful.
But when you do find some, it can actually save you lot of money. As they say, knowledge is power!
Here are some of my findings on refinancing the home loan which you may find helpful.
1) Everyone already knows - always ask for Good Faith Estimate. (GFE)
2) To make it easy I have created a table which tells you which are government fees and which are third party costs etc.
| Various Fees On GFE | Comments |
| Lender Fees | |
| Processing fees | Can be negotiated. |
| Document review | Can be negotiated. |
| Appraisal fees | Can be negotiated. |
| Tax service fee | Must be paid. |
| Flood certification | Depends on the area where you live |
| Credit report fees | Usually very small. Around 35 to 50$ |
| Origination fees | Can be avoided completely. Especially if you are paying points. |
| Third Party fees | |
| Title insurance | Can be shopped for and negotiable. For more info please refer note #3 |
| closing fees/attorney fees | Must be paid |
| Document preparations fees | Can be negotiated. |
| Scanning / Courier Charges | Usually very small. Around 35 to 50$ |
| Govt. Fees | All in the list must be paid |
| Recording fees | For more info please refer note # 4 |
| County taxes/tax stamp | For more info please refer note # 4 |
| Property taxes if applicable at the time of closing | |
3) Little more on title insurance – A title insurance always consists of two policies – homeowner's and lender's. When you are refinancing only lender may change. The owner which is you is still the same. Hence re-writing home owner's policy can be avoided unless your current title insurance is more than 10 years old. Needless to say this can happen only if you are closing with your existing title company which is recommended as they also may offer more discounts. Lender always will have their own title insurance company but you are free to shop and inform lender which title company you would close with.
4) You can find Registry of Deeds office for your county and verify recording fees and county taxes/tax stamp fees with them. Recording fees always depends on number of pages in the document and usually is charged per page.
5) About points – In my personal opinion, it totally depends on your goals. So answer to - if you should pay points, will differ from case to case. We paid points first time, because we wanted to lower our monthly payments.
6) 30 years- 20 years-15 years loan term? – Everyone thinking of refinancing already knows that 15 years will cost less interest and bigger monthly payments. However here is food for thought. I personally will opt for 30 years rather than 15 or 20. Because once we sign that contract, we are committed to make the payment for the term and we always like to reduce our commitment especially if the pay period is longer. We can always pay extra principal towards the loan and can almost save same money on interest on 30 year loan that one would save on 15 year loan. But this approach gives us tremendous flexibility when we are in need.
