Mortgage closing costs?

[Idaho45guy]

Decided to do a re-fi on my mortgage since current rate is 5.5% and wanted to roll in a HELOC. Got a 3.5% rate. Other places I looked at offered 3.75% and 4%. But, their closing costs were around $1700 and $2500. The lowest rate place was Quicken Loans but their closing costs were $6k (!). $2000 of that was paying the years taxes and insurance.

Monthly payment was the lowest by $50 a month, and everything else is good, but the closing cost amount (that they roll into the loan) just seemed excessive. Haven't signed anything, so wondering if closing costs are usually negotiable, or if I should just accept it and move on.

[white eagle]

closing costs are a pain for sure
I don't know for sure but in this day and age I think that you are just going to have
to take it and move on
when I did mine we got no closing costs but that was at a much lower rate
and a different time

[ourflat]

Are you using USAA? If so, I have never found them competitive in this area of mortgage loans.

Frank

[JoeJames]

Each mortgage company will have different fixed fees and rates. Don't hold your breath on negotiating with them. In guaranteed loan situations it is very normal for the lender to require 12 months worth of insurance and taxes.

[Handloader109]

A couple of points. Make sure that you aren't extending the length of your loan..i.e
go from say 25 back to a 30 year loan, or 9 to a 15 and think you are saving money......

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[Half Dog]

Perhaps in September, when the government releases their grip on lenders and property management, rates may go down and foreclosures will increase.

[remy3424]

You have the "closing costs" and then you have the pre-paid items (odd days interest and funds for the escrow account for the taxes and insurance) The prepaids will vary due to the amount of your taxes and HO Ins, when they were last paid, next due and when your first payment on the new loan is. I will guess the closing costs are at least $2,000 (possibly less if an appraisal isn't required) and the funds to set-up the new escrow are very likely all of that or more. You can maybe pay a higher intererest rate, to have the lender give you a credit for some of the costs, but 99% just take the lowest rate and roll the costs into the new loan.

[M-Tecs]

That seem very high. I just re-fi'ed from 2.75% to 2.25%

[Winger Ed.]

You have the "closing costs" and then you have the pre-paid items.

The lady at the desk or on the phone doesn't have a lot of room to negociate their company policy.

All the mortgage companies do is rent money, just like other companies rent cars or apartments.
Shop around for who will rent you some money at the best interest rate, no early pay off penalty, and the lowest closing fees.
15 years is the best if ya can swing it, but I personally wouldn't get a home loan that went past 20 years.

[CastingFool]

Last refinance we did, was with our credit union. Closing costs were minimal, our payment was reasonable, and no penalty for early payoff. Stopped doing business with banks after that

[Gus Youmans]

To determine the true cost of a loan you need to take the total of the monthly payments and add it to any other out of pocket expenses that you may have to pay. Therefore, a lower interest rate but with higher closing costs may cost you more in the long run than a higher interest rate and lower closing costs. Do the math.

If you are primarily interested in lowering your monthly payment that is another issue.

Gus Youmans

[MrWolf]

You could also check with your local bank. It actually might cost you a few dollars in difference but you would be supporting your local economy. I am in a rural area so it might make a difference. When I calculated the differences, was worth it to me to stay local. Good luck. Each offering requires a different set of calculations to get every associated cost. A lot of places will have hidden costs, document fees, title work, etc.

[Adam20]

Have you asked your current lender about re-fi options. My local credit union i can pay flat fee and lower the rate to current fixed rate.
Local community banks and credit unions often times have better rates and closing cost. I have found out if go to bank or credit union and talk to a live person they have better options than internet or calling them.

[downzero]

You could also check with your local bank. It actually might cost you a few dollars in difference but you would be supporting your local economy. I am in a rural area so it might make a difference. When I calculated the differences, was worth it to me to stay local. Good luck. Each offering requires a different set of calculations to get every associated cost. A lot of places will have hidden costs, document fees, title work, etc.

They just immediately sell the loan anyway. The money won't stay local for long.

[MrWolf]

They just immediately sell the loan anyway. The money won't stay local for long.

I looked anyway. They at least get a piece of the pie which is better than nothing.

[shdwlkr]

Have you looked at freedom mortgage company as a veteran they just might give you a better deal

[Rich/WIS]

Middle of the process now, rate of 2.75% with a VA loan as opposed to my current loan at 4.375%. This is fro 15 years, extended loan time by 3 years from where i am now but difference in payments well work it.

[snowwolfe]

I refinanced twice in the last five years. Each time Quicken had the highest closing costs by far.
If your a vet make sure you do a VA loan if at all possible. The VA has rules about the refi fee's and you can save a bunch of coin.
Our current house does not have a VA loan and it cost me when it came time to refinance.

[remy3424]

There are no hidden fees, your loan estimate will show every charge that the lender expects there to be. If something changes in the application (a change of circumstance), which causes any costs to increase, they will issue a new LE to disclose that. When refinancing a VA loan, ask for an IRRRL (interest rate reduction refinance loan), less hoops and lower funding fee (unless you are already exempt).

Gus had good advice on comparing offers...as use that as a rough guide to decide on the value on refinancing. Take your month P&I payment times the number of remaining payments on you current loan...compared to to to the total of payments on your proposed loan.

It will boil down to what you need or what your goal is. Payment reduction, cash-out, shorten term, lower interest rate...a short term will raise the payment, but have a lower payment and lower finance charges over the life of the loan...in this age and the price of housing, short terms just aren't going to work for many borrowers. You don't want to be " house poor". If you do selection a 30-year term I think most states don't allow prepayment charges that would keep you from making extra payments when you can. There might be a charge in some states if you prepay a substantial amount of the entire balance in the first few years.

[BamaNapper]

With my two re-fi's I stayed with the same lender (Wells Fargo). When the whole country started refinancing, they were proactive and contacted me both times before I ended up going elsewhere. I agreed to consider, they sent the paperwork, I signed it, then mailed it back. The interest rate dropped and there were no costs associated with the process either time. It did extend the term of the loan, but didn't increase the payoff amount by a dollar. The increased loan term was not a factor as we have continued to make the same payment we were making before the first re-fi. There are no prepayment penalties so it has been a win with significantly more going to principal every month.

As noted, our approach is not for everyone. We weren't setting out to lower out payments and our loan balance is modest. Our goal has been simply to get the loan paid off faster with the same payment. I could have found lower rates elsewhere but fees would probably offset most of the savings. But the real selling point was the convenience of the process as it literally took less time than writing this comment. Same lender and same loan means no application and approval process.

[blackthorn]

All four of the mortgages I have had were set up to make a payment every two weeks, rather than once a month. This alone reduces the overall cost significantly. Also each mortgage had a stipulation that I could make an extra payment at any time without penalty.

[Handloader109]

With my two re-fi's I stayed with the same lender (Wells Fargo). When the whole country started refinancing, they were proactive and contacted me both times before I ended up going elsewhere. I agreed to consider, they sent the paperwork, I signed it, then mailed it back. The interest rate dropped and there were no costs associated with the process either time. It did extend the term of the loan, but didn't increase the payoff amount by a dollar. The increased loan term was not a factor as we have continued to make the same payment we were making before the first re-fi. There are no prepayment penalties so it has been a win with significantly more going to principal every month.

As noted, our approach is not for everyone. We weren't setting out to lower out payments and our loan balance is modest. Our goal has been simply to get the loan paid off faster with the same payment. I could have found lower rates elsewhere but fees would probably offset most of the savings. But the real selling point was the convenience of the process as it literally took less time than writing this comment. Same lender and same loan means no application and approval process.But if you increased the loan back from say 25 years back to a 30 year, you may very well pay way more in interest, even with a refinance. Wells Fargo isn't refinancing if they can't make a few dollars..... Its where a good calculator and a few minutes helps. Just because you can cut your payments by $50 a month doesn't mean you save money..... (principal would stay the same unless a charge for the refi is rolled into mortgage)

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[BamaNapper]

But if you increased the loan back from say 25 years back to a 30 year, you may very well pay way more in interest, even with a refinance. Wells Fargo isn't refinancing if they can't make a few dollars..... Its where a good calculator and a few minutes helps. Just because you can cut your payments by $50 a month doesn't mean you save money..... (principal would stay the same unless a charge for the refi is rolled into mortgage)

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As I noted, we continued making the same payment we had been making prior to the re-fi even though the payment due was reduced. So, if the payment due was $50 less after the re-fi, we simply made the payment and put that $50 toward principal every month. What the re-fi did was to lower the amount of interest that was added back to the balance every month. We could have changed it up and had the re-fi written up for a shorter term, but then there would have been fes associated with the re-fi and we would have lost much of the benefit.

[Handloader109]

Yes,but the key to what I stated and what you did are two different things. YOU continued to PAY more than required. YOU are paying principal down by the $50 (IF YOU ARE DESIGNATING THIS AS EXTRA PRINCIPAL PAYMENT.) If you just add $50 to the payment, it just goes to reduce next month's payment, not principal. Some mortgage companies require a separate payment to apply it to the principal. I've had different mortgage companies that have done it both ways.
But no more. Mine's gone for good...
Just sayin.

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[BamaNapper]

Our payments are all done online. We enter the amount to transfer and anything over the payment amount defaults to going into the principle payment box.

Our mortgage is almost gone and I am getting tempted to add to it. Normally I'm all against picking up debt, but with every economist out there screaming inflation and doom this may be the time to put on that metal roof and get the house painted. Normally we'd just do that with budgeted home funds, but adding it to the mortgage would allow us to purchase at today's prices and pay back with inflated dollars over the next few years.