Unnecessary closing costs and mortgage interest cost homeowners $16 billion dollars every year according to the Secretary of Housing and Urban Development. Do you want to avoid being taken advantage of when mortgage refinancing? Here are several tips to help you avoid unnecessary closing costs when refinancing your mortgage loan.
When comparison shopping for a new mortgage loan it is important to request a copy of the Good Faith Estimate from each lender you consider before submitting your application. Use the Good Faith Estimate to compare loan offerings paying attention to the itemized closing costs; don't focus on the total closing costs because lenders often low-ball third party charges to make their loan offers appear more attractive.
Watch out for lender junk fees; if you find anything on the Good Faith Estimate that resembles an application fee, lock fee, or broker courier, these are junk fees that you should question your mortgage representative about. The origination fee found on your Good Faith Estimate should never be higher than 1-1.5% of your loan amount for a home you live in and 2-2.5% for an investment home. Finally, check your Good Faith Estimate for the loan processing fee. This processing fee should not be more than $400 and is frequently inflated by the mortgage company.
If there any charges found on your Good Faith Estimate that you do not understand, don't hesitate to question your loan representative about the validity of that charge. Also, if you think any of the third party settlement charges on your Good Faith Estimate seem to low, you can contact each company listed and ask them what their fee is. This will give you an accurate picture of the settlement charges you will be required to pay.
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