Bank and Broker Fees

The Potential Fees You Will Pay for Your Mortgage Refinance

Refinancing fees can vary widely and are something that you absolutely have to compare when looking to refinance an existing mortgage or take out a new mortgage.  In all the APR can often help you assess the extent of fees, as can the truth in lending document you receive from your broker or bank.  However, understanding the actual fees can give you an idea of whether you may e paying too much and what might be negotiable.  Thus we thought it would be helpful to list some of the more common fees you will pay in any mortgage refinance:

Application fee

This general charge from the broker or bank covers the their own costs of processing your mortgage loan.  This includes things like checking your credit score.  As opposed to the Origination Fee covered next, this fee is usually all about those activities that the mortgage broker or bank has to do up front to see if you even qualify and before you may have made a final decision.

Refundable: Sometimes – important to ask up front if you are at all concerned about your appraisal, your credit, or anything about closing your loan

Amount: Varies from $0 to $500

Negotiable: Yes

 Loan origination fee

This fee can be indistinguishable from the application fee, but the difference is that this fee pays for the activities of the bank or broker after you have decided to move ahead with your loan.  It is the amount that is charged by the broker or bank to prepare your mortgage loan.

Refundable: Sometimes – see above

Amount: Varies from $0 to $1,000

Negotiable: Yes

Points

One point equals one percent of your mortgage loan.  There are two reasons you would end up “paying” points.  You might be paying loan-discount points, which are used to pay down your interest rate, or you may be paying points just to get the loan itself if you have a low credit score or a great rate to begin with.

Refundable: yes, you do not pay them unless you close

Amount: As little as a quarter point can be charged

Negotiable: Yes, especially loan discount points

 Appraisal fee

This fee goes to the person providing the appraisal of your home or prospective home.

Refundable: Almost never

Amount: $250-400

Negotiable: No

Inspection fee

Particularly with new homes, the lender may want certain aspects of the home inspected to make sure you won’t face large unexpected expenses that could affect your ability to make mortgage payments.  This may include termite inspections, for example

Refundable: Usually not

Amount: Depends on the type of inspection(s) needed – know what the going rates are

Negotiable: Yes – you can sometimes ask the bank to pick up these fees

 Homeowner’s insurance

Your lender will require that you have a homeowner’s insurance policy (sometimes called hazard insurance) in effect at the time of settlement of your mortgage.

Refundable: You pay the insurance company directly

Amount: Varies – you can shop around

Negotiable: No

Title search and title insurance.

The bank or broker will want a title insurance company to search the legal records to ensure that you are (for a refinance) or will be (for a new home loan) the rightful/legal owner of the property.  This search also checks for possible liens you may not know about and would cause you at the very least financial headaches.

Refundable: Usually not, but this step is usually not taken until most everything else has checked out, like appraisal and your credit.

Amount: Around $1000, sometimes less if a title search was done recently

Negotiable: Yes – not the price itself but whether the bank will pick up some of the cost

 Survey fee

Lenders sometimes require a survey to confirm the boundaries of the property, though this is not always necessary.

Refundable: Usually not, but this is also something not done until the end

Amount: Varies from $200-500

Negotiable: Yes, again not the price but whether the bank will pay some or all

Cost = $150 to $400