refi fees

[georgeharrison]

My mom is trying to refinance her house. The total closing costs are over $8k.  That is high, right?  We are talking less than $200k loan.  The fee for the lender is $1k, the rest are things that he's saying are "out of his control such as tax, title, insurance."  

ETA:  They have excellent credit, but are self-employed.  Not sure if either of those factors play into this at all.

[turkletsmom]

What's their normal taxes and insurance? Is it their escrow for the whole year that they are collecting? When we refinanced last year we had to bring $10k to closing, but $6k+ of that was to fund the escrow. We then got a check back from our old lender with the escrow balance they had remaining in our account so it was almost a wash.

[georgeharrison]

The escrow funding is like $1300. Taxes are low here.

[noodleoo]

Yeah, that seems really high to me. We just refi-ed and I want to say the total closing costs were around $2-3K, but we also got a lender credit that covered most of it. It was a "no cost refi", meaning we got the lender credit for a slightly higher interest rate. The difference in interest rate wasn't huge, so we chose this option.  We also didn't need an appraisal, so that saved us $500.

Are they paying points to get a lower rate?

Are they still in the shopping for a refi phase?  If so I highly recommend looking at Costco Financial.  We contacted several brokers and both the fees and rates were better through the lenders at Costco.  We ended up buying a Costco membership to save more, but you can get quotes without one.  It was totally worth it.  The process was actually faster and easier than any refi I've done before (this was our 4th or 5th LOL).

[lessel]

On our recent refi the loan costs were $1741... including things like credit report, four kinds of title fees, origination charge ($250). The rest of the closing costs (above the $1741) was our escrow account.

I see a $800 lender credit on the form. We also didn't have an appraisal fee ($500) or a homeowner association document search ($300).

[Susie]

Sounds high to me.  She should have a disclosure that breaks out all out.  Do you have that handy so we can see which pieces look high?

[georgeharrison]

sorry, this is small

Attachments:

[lessel]

Just looking quickly while my kid is taking a bath… The points is the biggest charge it looks like. Buying down the interest rate.

Origination can be lower and may be negotiable. Ours was $250. But that’s only a few hundred. We also were able to get appraisal waived. So you can nickel and dime reduce that way, but a chunk is points.

[puppylove64]

The $1396 and $1406 is insurance/property taxes. Some of that might be refunded from previous mortgage

[noodleoo]

Sept 9, 2021 15:11:27 GMT -5 georgeharrison said:

sorry, this is small

Whoah, why are they paying 1.4% in points? What’s the interest rate? That’s really high and that’s why the closing costs are so high. The loan origination fee is also ok the high side. With Costco that fee is capped at $250, which is why it was worth paying $100 for a membership to me. It was more than worth it. The rest of the fees look in line which what I’ve seen before.

[flygirl]

The points and origination fees is over 3K. If that’s not buying down the rate, that’s a lot. Are they at a high LTV? If not, I’d try another lender

[simpsongal]

If they've owned for a while, they should be able to find someone to waive the appraisal too. That's another $500+

ETA: PM me if you want a broker referral.  I wouldn't mind throwing my guy some business since he reached out to me to refi this last time, and that had quite a ripple effect on this board - thanks Kent!

[wildrice]

I think that's high. We are in the middle of a refinance through Costco, and we're paying under $1500 for the loan and around another $1800 in prepaids, for a total of about $3300 to close. Our loan is for 258k.

[madisen]

Just a comment that if your loan is a traditional conventional conforming loan, lenders and brokers aren’t making the decision to waive an appraisal. The FNMA or FHLMC automated underwriting system is doing that based on your loan and collateral characteristics.

[froggy76]

People use the term "closing costs" pretty loosely. The items on the right side of the sheet you posted are just her escrow and interest pre-funding, so those aren't really closing costs. If she has money in her current escrow account, she'll get that back. Keep in mind that you always skip the first month's payment when you have a new loan, so the pre-payment of interest covers that.

The charges on the left look mostly ok except the origination fee and points. Some lenders don't charge any origination fee at all. Almost $1,000 is a lot. And the points charge is very high so I assume she's getting a big rate reduction but it wouldn't be worth the upfront cost to me, personally. You'd have to estimate the savings from the lower rate to see if it's worth it.

I never like the idea of paying a lot for a refinance because it's a sunk cost if you decide to refinance again soon. I've actually chosen to take a higher rate in exchange for a lender credit (the opposite of paying points) so that I'm never out of pocket any refi costs. But that makes sense for me because I hope to pay off my loan early so a slightly higher rate won't make too much difference.