If you have a mortgage broker or have worked with someone on home financing in the past, there is a good chance that you have been contacted by that person during the last few months.  With interest rates near all time lows, a lot of homeowners are taking advantage and reducing their borrowing costs.  It is a good time to look at refinancing as an option, but as a borrower, you should be aware of several costs that you may not know about.

The benefits of a better interest rate can be wasted by hefty fees associated with securing the new mortgage loan.  You should have a clear understanding of the fees before you make a final decision.  Some of these fees include:

- Broker or Lender Fees: Of course these fees won’t be labeled as broker fees, but they are simply there to increase the profit made by the broker putting the deal in place.  These fees are likely to be called processing fees, administration fees, or document preparation fees.  These fees should be outlined in your good faith estimate, but unfortunately many dishonest mortgage brokers find a way to increase these fees just prior to closing.

- Third Party Fees: These fees are designed to pay for services such as home inspections, appraisals, and title searches.  These fees are also negotiable, and only some of these services are actually required.  You should also look into whether or not you can find your own home inspector or appraiser that will charge an amount that is lower than the estimate.

- Government Fees: These fees are typically not negotiable, but it’s still important to understand that they do factor into the cost of borrowing.  The most common government fee is the cost of recording the deed.

It’s impossible to avoid all of these fees when you refinance your mortgage, but as a borrower you do have options that should help keep these fees to a minimum.  First, shop around.  Nobody in the mortgage business likes to be shopped against other mortgage brokers, but you have every right to take advantage of the competitive landscape in the mortgage world.  In addition, you should only work with lenders that will outline their fees for you upfront and put them in writing.  There are plenty of lenders who will commit to this, so if your lender hesitates to be honest and upfront about fees, don’t be afraid to walk away.

Tags: Refinance, hidden fees, good faith estimate, mortgage

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Tags: good faith estimate, hidden fees, mortgage loan, Refinance

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