Refinancing Your Chattanooga Home

If you are considering refinancing there are a few cost and considerations that you will want to consider.

1. Closing cost charged by the Lender
Typical fees charged by lenders include an application fee, processing fee, closing fee, MERS, credit report, and possibly a few others. A typical cost is between $1000-$1350.
– Note some lenders may charge and origination fee or discount point which are basically the same thing. Be warned that these are unnecessary fee charged to you to make their rate appear better than it really is. Typical cost are between 0.5% to 2.0%+ of the loan amount which is a major cost. Having all lenders provide a quote without either of these fees will make comparing them easier. Buying a point to lowering your rate may make sense if it is cheap enough. Typically 1 discount point cost 1.0% of the loan amount and lowers the rate 0.125% which will take 139 months to make up that cost. However if you can buy a point for say half of that or 0.5% it may make sense if you plan on being in the home for more than 6 years.

2. Appraisal Cost
The fee charged for an appraisal will vary depending on the type of loan but are now, due to recent mortgage regulations, generally the same from lender to lender as almost all are required to use a appraisal management company so to not influence the appraisal.

FHA, VA, THDA, USDA – $450
Conventional – $400
Streamline with out appraisal – $0 (FHA, VA, and Conventional)
– A streamline loan will require your file to be run through automated underwriting and receive and approve/eligible with appraisal exemption. This will vary depending on your credit, debt to income, and if your property shows up in the applicable database (FHA, VA or Fannie Mae or Freddie Mac for conventional loans). It may also depend on when your home was securitized and sold to one of these agencies.
Streamline with appraisal – $250 (Drive By) or same as above (Full)
– A streamline with appraisal will either require a full appraisal or a drive by appraisal to basically ensure that the home is standing.

3. Title Cost
Most title companies will charge a closing fee which will include a title search fee which is typically between $400-$500. Title companies also must charge a title insurance (lenders and owners tile both paid by borrower) which can vary from county to county but are usually between $450-$750 per $100,000.

4. Prepaid Taxes and Insurance Escrows
These cost are included in the settlement but are really not a a cost of the refinance meaning you would have to pay these cost anyway. Also what ever is in your current escrow account will be refunded to you with in 30 days of closing by law. To determine your estimated prepaid items multiply your monthly taxes and insurance cost by the number of months till taxes are due plus 2 months (expect between 4 months minimum to 14 months). If you are closing near the end of the year expect to pay at least 12 months as most lenders pay the taxes on December 1st.
– Note if you do not currently escrow your taxes and insurance, you will not get a refund. Also if you have more than 20% equity you may not be required to escrow, but expect to pay a 0.25% premium for not escrowing taxes and insurance on your new loan.