Basics of refinance: Costs and fees to consider

by Barbara Rybicki 11/07/2022

Many homeowners have at least entertained the idea of mortgage refinance. Common questions about refinancing costs, closing costs and how the process might impact a current mortgage loan are just a few of the queries swimming around in the refinancing conversation.

Don’t worry. There are a few general topics that can easily answer these questions and a slew of others. Here are three topics to help you get the refinancing conversation started with your mortgage lender:

How much are refinancing costs?

The cost of refinancing your mortgage will vary depending on a few factors, like the remaining mortgage balance from your initial loan, lender fees, whether your lender requires mortgage insurance, etc. However, a general range is between 2% and 5% of the refinanced loan principal.

There are choices, however, to pay the refinancing costs as either upfront closing costs or, depending on your mortgage provider, the costs may be wrapped into the refinanced loan amount. This option typically allows homeowners to pay their “closing costs” with their monthly payment, depending on the terms of the loan agreement.

What costs can I expect to pay?

The costs associated with refinanced mortgages are fairly standard. In fact, many homeowners have already met with these loans when they received their initial loan. You can expect to see finance items such as application fees, loan origination fee, mortgage insurance, property-related fees, agent commission and attorney fees.

You may also see a few taxes and interest-related items appear in the closing costs, such as mortgage points.

Are there different types of refinancing options?

There are two main types of refinancing options: refinancing with closing costs and no-closing-cost refinancing. The key is to recognize which one is best for you and your current financial situation.

For example, a homeowner with enough savings to cover the closing costs, and who wants a lower monthly payment without a higher interest rate or other fee, might find the cost to refinance manageable. Likewise, a homeowner who wants to refinance but may not have a large savings or a lot of cash may choose to refinance with no-closing-cost refinancing.

The most noticeable difference between the two is no-closing-cost refinancing will likely take those fees and attach them to the monthly payment instead of requiring them up front.

While every lender and loan is subject to their own fees, requirements and terms, knowing what you’re searching for, your financial situation and where to start are crucial elements to refinancing. However, you don’t have to do it alone. If you have more questions about getting started, reach out to your agent and their pool of resources.

About the Author
Author

Barbara Rybicki

I am originally from Poland but have been a Grafton resident for almost thirty years.

I come from the Hospitality Business. I used to work in 5 Star Marriott Hotel Management. That experience taught me how to provide excellent customer service. That "Marriott" way of doing business instilled in me over the years helps me tremendously to succeed as a local real estate broker.

Nothing is more exciting to me than gratifying feeling I get from helping people reach their real estate needs and dreams. You can count on me to always do what is in your best interest. I will be there for you throughout the entire transaction making sure you understand each step of the buying or selling process. I will guide you with great communication skills  and hard work ethic. 

I have not only passion for my job but also extensive real estate expertise. Whether it is preparing and staging your home to sell for top dollar or helping you purchase a perfect home, feel free to reach out to me so we can start this process together.

I specialize in marketing and selling residential real estate in Grafton, Upton, Northborough, Westborough, Southborough, Shrewsbury, Milford, Hopkinton and Metro West area.

I can not wait to meet you!

Awards and Designations:

Realtor Designation since 2005

Licensed MA Broker since 2009

Accredited Buyer Representative (ABR)

Accredited Staging Professional (ASP)

Worcester Regional Association of REALTORS® since 2005

National Association of Realtors (NAR) since 2005

Multi-Million Dollar Producer

Remax Executive 100% Club 2013, 2014, 2016, 2017, 2018

Remax Platinum Club 2015

Remax Hall of Fame Club 2017