Mortgage Basics
Refinance Cost
Refinancing your mortgage can be a great way to save money, lower your monthly payments, or access home equity, but it’s important to understand the costs involved. At Vision Home Mortgage, we believe in keeping refinancing as affordable as possible, which is why we do not charge our clients junk fees that many other lenders include. Instead, the main costs of refinancing typically involve re-establishing your escrow account, title fees, and in some cases, an appraisal fee.
Refinancing Costs: What You Need to Know
Refinancing can be a smart financial move, but understanding the costs involved is key to making the right decision. So, what do you really need to know? Costs like buydown points, origination fees, and title fees can all impact the price of refinancing, and they vary depending on the lender. So how do you know if you are getting a good deal?
Breaking Down the Costs of Refinancing
Refinancing comes with several costs, but understanding them upfront can help you feel confident in your decision. Here’s a detailed list of the expenses you may encounter during the refinance process:
Re-establishing Escrow Accounts: What to Expect
An impound account, also known as an escrow account, is where funds are set aside to cover your property taxes and homeowner’s insurance. When you refinance, a new escrow account is typically required to ensure these expenses continue to be paid on time. However, this is not a lender fee—it’s simply a way to manage these payments efficiently.
The amount needed to fund your new escrow account depends on several factors:
- Property Taxes – Charges will vary based on how much has already been paid and what is still owed for the year.
- Homeowner’s Insurance – The amount required will depend on your annual premium and when it is due.
The good news? You may receive a refund from your current escrow account after refinancing, which can help offset the cost of setting up the new one. Understanding how escrow accounts work ensures there are no surprises when refinancing your mortgage.
Title Fees: What to Expect
When refinancing, a new title search and title insurance policy are required to confirm legal ownership and protect against any potential claims on the property. The good news is that title fees for a refinance are typically half of what they were when you first purchased your home, making this a much lower expense compared to your original closing costs. These fees ensure your new loan is properly recorded and that you have clear ownership moving forward. While required, they are a one-time cost that helps protect both you and the lender throughout the life of your mortgage.
Appraisal Fee (If Required): What to Expect
In some refinance situations, a home appraisal is required to assess the current market value of your property. This helps ensure that the new loan amount aligns with the home’s worth. However, the good news is that many borrowers qualify for an appraisal waiver, eliminating this cost entirely. Whether or not an appraisal is required depends on factors such as your loan type, equity in the home, and lender guidelines. If an appraisal is needed, the fee typically ranges from $400 to $700, but we will always check if you qualify for a waiver to help keep your refinancing costs as low as possible.
Credit Report Fee: What to Expect
As part of the refinance process, lenders must pull your credit report to assess your financial history and ensure you meet loan requirements. This comes with a fee, typically ranging from $100 to $200, which covers the cost of obtaining your report from the credit bureaus. While this is a standard part of the approval process, it helps lenders determine your eligibility and secure the best possible terms for your refinance. At Vision Home Mortgage, we aim to keep your refinancing costs as low as possible while ensuring a smooth and stress-free experience.
Discount Points: What to Expect
Discount points are an optional upfront cost that allows you to buy down your interest rate, reducing your monthly mortgage payment over the life of your loan. Discount points vary and can be used to buy down your interest rate.
While paying points can increase your upfront costs, it may be a smart long-term strategy if you plan to stay in your home for many years. The savings on your monthly payment can add up over time, making it a great option for homeowners looking to reduce overall interest costs. Our team at Vision Home Mortgage can help you determine whether purchasing discount points is the right move for your financial goals.
Origination Fees (Not With Us!): Keep More Money in Your Pocket
Many lenders charge origination fees or admin fee as part of the refinancing process. These fees can add up quickly, impacting your overall savings. But at Vision Home Mortgage, we believe in keeping your refinance as affordable as possible. We do not charge any junk fees or origination fees, meaning you won’t see unnecessary costs tacked onto your loan. Our goal is to help you maximize your savings and make refinancing a smart financial move without any hidden fees.
Keeping Refinancing Affordable and Transparent
At Vision Home Mortgage, we believe refinancing should be an opportunity to save money, not an added expense. That’s why we don’t charge junk fees or origination fees, keeping your costs as low as possible. The main expenses involved in refinancing include re-establishing escrow accounts, title fees, appraisal fees (if required), credit report fees, and optional discount points if you choose to lower your interest rate. By clearly explaining each cost and eliminating unnecessary fees, we ensure a transparent and stress-free refinancing experience. If you’re considering refinancing, we’re here to help you navigate your options and make the most of your financial future.
