Refi - closing costs high?

[katb]

We are refinancing.  Going from 5.5 to 2.75 (20 year).  We are doing a cash pull out as well for much needed repairs (plumbing, concrete, and kitchen upgrade).  However, closing costs are almost $8k.  We have the option to pay less closing costs but the rates go up - 3.125 I believe to save $2100 on closing.
We have decent credit.  The last loan was 10 years ago and we had good credit but a high utilization rate.  The last 10 years, we have paid almost everything off even with one kid through college.  This new refinance even with the cash pull out, leaves the same amount of time for the loan and actually lowers our payment!  

Should I suck it up - or keep on looking.  This is the best rate that has been offered after soft and hard pulls of credit.  Even a VA loan interest rate was higher - 3.1%.



EDIT - I guess I should add the total loan would be $225K, we are pulling out $65K.  The house is probably valued at $350K before the repairs, updates, etc.

[azalea]

Of the $8k -- how much are the actual refinance costs (origination fee, appraisal, title fees, etc.) vs. escrow funding (pre-paying property taxes, insurance, etc.)? Our property taxes are $12k per year and we were required to place 6 months worth in escrow with our refinance... so that was $6k right there. The escrow from our old mortgage was refunded to us after the refinance went through. Actual refinance fees were around $3k.

Have you checked rates / fees against lenderfi.com? They seem to get good reviews.

[flygirl]

Are you in the US? I know there were some rates in the high 2s recently, but most of what I’ve seen you can only get that for 15 yr loans unless you pay points to buy it down. I would ask for a breakdown of the costs. For what it’s worth, we’re paying nearly 3k for filing fees, appraisal, and title insurance for a 15 yr-that doesn’t include escrow and no points.

[sparty04]

We just refi’d and took out an extra 25k, and paid about 2500 in closing costs. We don’t do escrow though.

[katb]

Ah, I should see how much is escrow. I would imagine $3k - $4k is probably escrow for taxes and insurance. Yes, I have to pay points. The difference with no points amounts to $30 a month higher and $2k savings from closing. I think it was a bit over 6 years for it to start costing more to pay the higher month fee and lower closing costs. This is more than likely our forever home. I just need to see what I can negotiate I guess.

[madisen]

You should have a breakdown of costs on your LE, initial disclosure. Closing costs is a very loose term that depends a lot on how your loan is structured (paying points upfront to get a better rate) and disclosed (how many days' interest are included in your prepaid as well as if you will have an escrow account for taxes and insurance).

Most lenders can't net your escrow balance either if they're not the current servicer of your loan. But whatever is unused in your current escrow account will be refunded to you after your old loan is paid off.

The only way to do a real apples to apples comparison is to complete an application and get an LE on the same day from more than one potential lender.

[njohnson1972]

Financing or Refinancing in Florida is very expensive. I have owned houses in Alabama, Georgia, Louisiana, Texas and Florida and Florida is the most expensive as far as financing costs go. Florida, since there is no Income Tax and relatively low property taxes, makes up for it with Deed and Mortgage taxes when financing. Those 2 taxes easily run me $3,500-$5,000 when I finance. Then you add Title Insurance, another $1,000-$2,000. Then any prepaids for escrow.

[Susie]

Jul 4, 2020 18:33:46 GMT -5 katb said:

Ah, I should see how much is escrow. I would imagine $3k - $4k is probably escrow for taxes and insurance. 

As long as you're <80% LTV, you should be able to just decline to escrow taxes & insurance and then you don't need to prepay those.  We refi'ed last October, and I had to correct them over and over again that we were not going to escrow.  It significantly reduced the amount of cash we needed to do the refi.

[simpsongal]

Per njohnson1972 , it's state specific for sure. I think our closing costs were around $10K on the loan we just closed. But we're getting some money back from our current escrow, and a fair amount of those costs were state taxes and typical fees. I refi'ed my student loan a couple months ago - I wish it were that cheap and easy b/c you can do that w/zero fees. But yeah, refinancing a mortgage isn't free. We also had to pay a subordination fee and rate lock extension b/c we had just opened a HELOC before starting the refi.

(We did a 20 yr mortgage at 2.875%).