What are the Mortgage Refinancing Fees?

Banks Editorial Team · May 1, 2018

Mortgage refinance fees include an Appraisal, Title Policy, Escrow, Loan Points, Origination, Processing, Underwriting, Wire, Beneficiary Demand, Application, Administration, Re-conveyance, Credit Report, Notary, E-mail doc, Tax service, and Recording fees.

When you decide to take out mortgage refinancing, you also incur additional costs and refinance fees. These are added to the original loan, increasing the total amount. The major mortgage refinancing fees are an appraisal, title policy, escrow, loan origination, underwriting, loan points, beneficiary demand, re-conveyance, credit report, and tax service. Other miscellaneous refinance fees include wire transfer fees, application/administration fees, notary, and recording fees.

 

Appraisal

An appraisal fee is paid to a professional appraiser who evaluates a home and calculates an estimate of its market value. Appraisal fees usually range from $300 to $500 but are also dependent on the size of the appraised property.

Title Policy

Homeowners who want to take out a mortgage refinancing loan can choose from three kinds of title insurance coverage: owners, lenders and extended coverage. Depending on the agreement, sellers and buyers can split the title policy insurance cost. Title Policy cost depends on the type of coverage and the insured property.

Escrow

The escrow fee is paid to a “third party” who ensures that both the borrower and lender meet their obligations. An escrow is commonly used in home sale and purchase but is also used in home refinancing. Escrow fees vary according to the loan agreement.

Loan Points

Also known as “loan origination fee” as well as “loan discount”, a loan point is designated by lenders as one percent of the total loan. This means that if you borrowed $500,000 for your home mortgage refinancing and pay one point, you’ve paid $5,000. Refinancers divide the total loan points paid by the total number of monthly payments throughout the loan duration.

Origination and Processing

Loan origination and processing fees are paid to loan officers to begin the process of underwriting a loan application.

The appraised value of your home together with the loan amount and interest rates make up the bulk of home refinancing costs. Estimate your total home refinancing costs using this free mortgage refinancing calculator from my FICO which include closing costs and fees.

Underwriting

This refinance fee is paid to a desktop underwriter who will decide whether to accept or decline a loan application. An underwriter is typically a computer program used by loan originators to assess a borrower against Fannie Mae guidelines using their FICO scores, housing expense ratio, and debt-to-income ratio.

Beneficiary Demand

This refinance fee is paid to a financial institution which holds a home refinancing borrower’s promissory note and mortgage. The fee covers the issuance of the beneficiary demand letter.

Re-conveyance

This is an official document and proof that a lender has paid the loan in full and is therefore released from the mortgage. The re-conveyance fee covers the recording of the deed in the county where the home is located.

Credit Report

Lenders including home refinance debtors need to present at least 3 credit report every year. The credit report fee is paid to 3 different credit rating agencies who provide separate FICO scores and credit reports. The final score affects the home refinancing borrower’s mortgage rates.

Your credit report affects your mortgage rates and loan application approvals. Checking your credit reports also helps in catching identity theft attempts early on. To get your free credit report now, request a copy from this online resource approved and authorized by Federal Law.

 

Tax Service

This refinance fee is paid to a tax service agency which runs a comprehensive background check on a property. The borrower pays the tax service fee to the lender which then passes it on to the agency. Mortgage lenders are required to disclose information about the way tax service fees are collected within the state where the home is situated.

Wire

Banks collect a wire transfer fee for home refinancing loan transfers.

Application and Administration

These refinance fees are collected for processing loan application and relevant documents.

Notary and Attorney Fees

These are usually included in title charges along with title insurance.

Recording

This fee is paid to the local government agency responsible for recording a refinanced home in the area of its jurisdiction. This fee varies from county to county in the US.

In summary, the major mortgage refinancing fees are: appraisal, title policy, escrow, loan origination, underwriting, re-conveyance, loan points, beneficiary demand and tax service. These vary depending on the particulars of the mortgage agreement and terms, as well as the home itself. Other miscellaneous refinance fees include wire transfer, application/administration,notary and recording fees.

 

 

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