Are these refinance closing fees reasonable?

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grapeape
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Are these refinance closing fees reasonable?

Post by grapeape » Tue Aug 07, 2012 1:25 pm

These fees seemed a little higher than I expected for closing but wanted to see what others with more experience than I think. This is to refinance (157k loan) at 2.75% for 15 years. House was built 6 years ago and refinanced in 2009 in case that matters. Current loan is a 30 year fixed at 5.25%. I plan on paying off the house in 4-6 years. The house is in Florida

Total origination: $925
Points: 0
Flood (life of loan): $19
State Mort Tax Stamp fee: $553
Intangible tax: $316
Deed recording fee: $71
Tax service fee: $78
Mortgage recording fee: 273.5
Survey: $500 (do they really need to even do this???)
Credit report fee: $22
Appraisal fee: $395
Title service fee: $1395 (they say this should come down when they actually get fees from the title company...i think they just put a high number here to estimate)

Total fees of closing: $4547.50

On top of fees there is 21 days prepaid interest ($250) and $900 escrow up front for tax/insurance with a $219 adjustment in my favor for whatever reason (aggregate accounting adjustment)

Total settlement: $5473

Are these fees too high?? I was expecting closer to 3k...i thought rule of thumb was 1-2% of loan amount for closing? PS this is not the GFE but an approximate loan cost illustration. I think I get GFE once I apply for the loan.

Thank you in advance!

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aja8888
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Re: Are these refinance closing fees reasonable?

Post by aja8888 » Tue Aug 07, 2012 1:37 pm

What is the Total Origination fee for? Sounds like "points" for the loan?

What is a Mortgage Recording fee for? That one has me buffaloed. Deeds are usually recorded with the County, but mortgages?

Survey is usually done to satisfy the tax assessor.

grapeape
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Re: Are these refinance closing fees reasonable?

Post by grapeape » Tue Aug 07, 2012 1:38 pm

Should I even bother refinancing?? I was planning on paying 3k in principle extra each month to pay it down...and investing another 5k in a taxable account each month. But I could just put all extra money beyond living expenses and emergency fund and just pay it down faster with my current loan (i.e pay 7 or 8k a month extra on top of scheduled payment). Thoughts?

grapeape
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Re: Are these refinance closing fees reasonable?

Post by grapeape » Tue Aug 07, 2012 1:40 pm

yeah, i have decided total origination fee is a fancy way of saying point without calling it a point. I have no idea what a mortgage recording fee is? I am pretty sure a survey has already been done either when purchased or refinance. Is there a need to repeat it?? Thanks!

NateW
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Re: Are these refinance closing fees reasonable?

Post by NateW » Tue Aug 07, 2012 1:46 pm

As I understand it, "points" used to buy down (prepay) the interest are deductable over the live of the loan for tax purposes, but "points" (the loan servicing fee) is not a deductable expense.

I do not like having taxes and insurance escrowed. For the last refinance I opted out of escrow, but had to accept a quarter point more on the loan interest rate to do so.

--Nate

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G-Money
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Re: Are these refinance closing fees reasonable?

Post by G-Money » Tue Aug 07, 2012 1:50 pm

Seems very steep. Calculate your breakeven period using the Mortgage Professor's calculator: http://mtgprofessor.com/calculators/Calculator3a.html

I aim to keep my breakeven period at less than 18 months. My guess is that with $4500 in costs, it will be difficult to breakeven that quickly.

I would get quotes from Aimloan, Amerisave, and NMA. All three will give you accurate, instantaneous quotes without requiring personal information.

I would also look at PenFed. With a 4-6 year payoff goal, you could explore PenFed's no-closing cost 5/5 ARM (fixed for the first 5 years at 2.875%, then adjusts no more than 2% for another 5 year period) and its no-closing cost 5 year HEL (fully amortized over 5 years, at 1.99%).
Don't assume I know what I'm talking about.

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aja8888
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Re: Are these refinance closing fees reasonable?

Post by aja8888 » Tue Aug 07, 2012 2:17 pm

Surveys are used to determine what, if any, improvements are added to the property over time. The tax assessor's around here won't let a loan through without a recent inspection and survey done. So if you added a room and have to show it on the survey, they can add taxes to the property.

ted123
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Re: Are these refinance closing fees reasonable?

Post by ted123 » Tue Aug 07, 2012 2:19 pm

Mortgages are often (typically? nearly always?) recorded with the county as well.

grapeape
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Re: Are these refinance closing fees reasonable?

Post by grapeape » Tue Aug 07, 2012 2:30 pm

Thanks for the info everyone. Penfed may be a good fit for me with no closing costs. How long is the 5/5 ARM loan paid over? While I plan on paying it off around the 5 year mark, I do like the flexibility of not HAVING to just in case but I couldn't figure the total length of that loan (i.e. after how long would it be paid off) on the website. Also, is there a prepayment penalty with them? It doesn't seem like they'd make much money off me if they cover all costs then I pay them back really fast....

This website is great! Thanks again :-)

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G-Money
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Re: Are these refinance closing fees reasonable?

Post by G-Money » Tue Aug 07, 2012 3:33 pm

grapeape wrote:Thanks for the info everyone. Penfed may be a good fit for me with no closing costs. How long is the 5/5 ARM loan paid over? While I plan on paying it off around the 5 year mark, I do like the flexibility of not HAVING to just in case but I couldn't figure the total length of that loan (i.e. after how long would it be paid off) on the website. Also, is there a prepayment penalty with them? It doesn't seem like they'd make much money off me if they cover all costs then I pay them back really fast....

This website is great! Thanks again :-)
PenFed's 5/5 ARM has a 30 year amortization. Of course, I would strongly recommend against going with a 5/5 ARM if you intend to stretch out your payments more than about 10 years.

When I had this loan earlier this year, there was no prepayment penalty (I got the loan in early 2012 and refi'd into the PenFed 5 year HEL a few months later). Read the fine print on their website, but I don't believe the policy has changed. There is a prepayment penalty for the 5 year HEL (if paid in full in <2 years); for my loan, it's less than $200.
Don't assume I know what I'm talking about.

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dm200
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Re: Are these refinance closing fees reasonable?

Post by dm200 » Tue Aug 07, 2012 4:04 pm

grapeape wrote:These fees seemed a little higher than I expected for closing but wanted to see what others with more experience than I think. This is to refinance (157k loan) at 2.75% for 15 years. House was built 6 years ago and refinanced in 2009 in case that matters. Current loan is a 30 year fixed at 5.25%. I plan on paying off the house in 4-6 years. The house is in Florida

Total origination: $925
Points: 0
Flood (life of loan): $19
State Mort Tax Stamp fee: $553
Intangible tax: $316
Deed recording fee: $71
Tax service fee: $78
Mortgage recording fee: 273.5
Survey: $500 (do they really need to even do this???)
Credit report fee: $22
Appraisal fee: $395
Title service fee: $1395 (they say this should come down when they actually get fees from the title company...i think they just put a high number here to estimate)

Total fees of closing: $4547.50

On top of fees there is 21 days prepaid interest ($250) and $900 escrow up front for tax/insurance with a $219 adjustment in my favor for whatever reason (aggregate accounting adjustment)

Total settlement: $5473

Are these fees too high?? I was expecting closer to 3k...i thought rule of thumb was 1-2% of loan amount for closing? PS this is not the GFE but an approximate loan cost illustration. I think I get GFE once I apply for the loan.

Thank you in advance!
I would ignore the prepaid interest because that is a wash. Prepaid interest just aligns the regular monthly payment with the partial month's interest because you are not closing at the end/beginning of a month. I would also ignore the escrow amounts because that monty belongs to you and is probably very similar to the escrow you have now.

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greg24
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Re: Are these refinance closing fees reasonable?

Post by greg24 » Tue Aug 07, 2012 4:10 pm

$4500 is a LOT of money. Or you could write a $4500 principal payment check and call it good.

ShowMeTheER
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Re: Are these refinance closing fees reasonable?

Post by ShowMeTheER » Tue Aug 07, 2012 4:23 pm

grapeape wrote:Should I even bother refinancing?? I was planning on paying 3k in principle extra each month to pay it down...and investing another 5k in a taxable account each month. But I could just put all extra money beyond living expenses and emergency fund and just pay it down faster with my current loan (i.e pay 7 or 8k a month extra on top of scheduled payment). Thoughts?
You should refinance, but not with this place. Find a low cost refi and get the shortest term (i.e., lowest rate) possible thanks to your aggressive payoff plan.

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dm200
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Re: Are these refinance closing fees reasonable?

Post by dm200 » Wed Aug 08, 2012 9:57 am

We have a first mortgage with Navy Federal Credit Union that we first obtained from a refinance. Their closing costs were very low.

Then, several years later, we refinanced that loan with Navy Federal -- and the closing costs were even lower because some of the charges were not necessary because it was a refinance with the same lender.

One advantage of a mortgage with Navy Federal Credit Union (IMO) - as well as with a lot of larger credit unions - is that, even if the credit union sells the underlying mortgage, you are not affected because that credit union retains the servicing of the mortgage, and you send the payments the same place, etc.

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mephistophles
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Re: Are these refinance closing fees reasonable?

Post by mephistophles » Wed Aug 08, 2012 10:37 am

I refinanced recently on line with American Heritage Capital. All closing costs were paid by "credits". If you have good credit, this should work for you.

rkhusky
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Re: Are these refinance closing fees reasonable?

Post by rkhusky » Wed Aug 08, 2012 10:55 am

I wouldn't pay more than $1500 for a refinance with zero points and the lowest rate available, unless I had a property that was difficult to appraise and I didn't have much equity. Generally, no cost refi's have higher interest rates.

dcrow
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Re: Are these refinance closing fees reasonable?

Post by dcrow » Wed Aug 08, 2012 11:12 am

rkhusky wrote:I wouldn't pay more than $1500 for a refinance with zero points and the lowest rate available, unless I had a property that was difficult to appraise and I didn't have much equity. Generally, no cost refi's have higher interest rates.
Is this possible?

ted123
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Re: Are these refinance closing fees reasonable?

Post by ted123 » Wed Aug 08, 2012 12:10 pm

The OP really needs to divide those "fees" into buckets to determine whether they're reasonable.

Five categories:
1. Fees paid to lender/broker
2. Fees paid to third parties (chosen by lender/broker)
3. Fees paid to third parties (selected by borrower)
4. Taxes and recording fees
5. Prepaids (interest and escrow)

Starting from the end...There's really no point in asking whether the last two are reasonable. They are what they are, and neither the lender nor the borrower can change them (aside from waiving escrow). Someone here might think the mortgage recording fee is outrageous, but it's set by the county and state where the property is located. The prepaids aren't properly a "cost" in my opinion because one would be paying those even if one didn't refinance.

In my experience the lenders do frequently overestimate the fees paid to third parties, because in some circumstances the lender can be on the hook if they underestimate. For the ones that the borrower can select (settlement service and title insurance, for example), they should shop around. For the ones, they can't select (appraisal, credit check), it's worth asking whether the costs are reasonable. Here, the appraisal and credit check seem in line with what I've paid -- I guess that makes them reasonable. I don't recall that I've ever paid for a survey, but that may be local custom or otherwise dictated by specific conditions. It may not be reasonable to expect a random group of posters on the internet to answer that question.

The main one to be concerned about, I think, is the fees paid to the lender/broker. This is where, when you're shopping around for a mortgage, you need to understand what the trade off is between fees/points and rates. Whether it's reasonable is hard to say without knowing the other refinance options.

tonsofthorns
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Re: Are these refinance closing fees reasonable?

Post by tonsofthorns » Wed Aug 08, 2012 12:36 pm

Locked in on a 15yr fixed @ 3.0% refinance about two weeks ago w/ Box Home Loans (They mostly do western states). No cost loan about a -1.0 point loan. I would shop a couple of other lenders: amerisave, firstib, etc. Hope this helps!

ddelapasse
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Re: Are these refinance closing fees reasonable?

Post by ddelapasse » Wed Aug 08, 2012 12:57 pm

I just refinanced our remaining 7 years to a 10 year (pretty sure 15 year was the same) @ 2.875%. Plan to pay the same amount we've been paying and pay it off early.

Total cost was $3058. They let me reuse our old survey. I'm happy to send you the HUD form if you'd like to use it for bargaining :-). PM me if you want it.

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mephistophles
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Re: Are these refinance closing fees reasonable?

Post by mephistophles » Wed Aug 08, 2012 2:41 pm

Again, there may be no need to pay any closing costs, other than prepaid interest and for inusrance and taxes. Also no points
Emergdoc explained this to me on this forum. No need to pay thousands of dollars in points and fees if you have good credit.

grapeape
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Re: Are these refinance closing fees reasonable?

Post by grapeape » Wed Aug 08, 2012 2:49 pm

After reviewing the responses (thanks!), I think the 5/5 ARM penfed loan is best for me. Given my timeline for pay off, no closing cost is best scenario for me, even if the rate accounts for the lack of closing cost. So I am about to get started on the penfed process.

I was searching the internet and this site and it seemed like there were some negative comments overall about the penfed mortgage experience. Anyone with personal experiences? I get that upset people are more likely to review something than those that were pleased with their experiences, but a common complaint I have seen is poor customer service and delays delays delays. As long as the loan closes before the 90 day lock is over, I don't particularly care about delays. But what happens if it gets delayed beyond 90 days (due to them, not me, I'd close in a week if they'd let me!)? The delays and extending closing past the lock are now my big concern.

Thanks!

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Watty
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Re: Are these refinance closing fees reasonable?

Post by Watty » Wed Aug 08, 2012 2:58 pm

grapeape wrote:After reviewing the responses (thanks!), I think the 5/5 ARM penfed loan is best for me. Given my timeline for pay off, no closing cost is best scenario for me, even if the rate accounts for the lack of closing cost. So I am about to get started on the penfed process.

I was searching the internet and this site and it seemed like there were some negative comments overall about the penfed mortgage experience. Anyone with personal experiences? I get that upset people are more likely to review something than those that were pleased with their experiences, but a common complaint I have seen is poor customer service and delays delays delays. As long as the loan closes before the 90 day lock is over, I don't particularly care about delays. But what happens if it gets delayed beyond 90 days (due to them, not me, I'd close in a week if they'd let me!)? The delays and extending closing past the lock are now my big concern.

Thanks!
I didn't have any problem with them when refinanced with that loan late last year.

I had a few minor followup things I had to send them but as I recall it closed in less than 30 days.

rkhusky
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Re: Are these refinance closing fees reasonable?

Post by rkhusky » Wed Aug 08, 2012 3:20 pm

dcrow wrote:
rkhusky wrote:I wouldn't pay more than $1500 for a refinance with zero points and the lowest rate available, unless I had a property that was difficult to appraise and I didn't have much equity. Generally, no cost refi's have higher interest rates.
Is this possible?
I've done it 3 or 4 times. No points, only needed a drive-by appraisal because of sufficient equity and in the suburbs with many similar houses, plus we have a good credit score. Perhaps the OP is in a state that has high recording fees. I haven't seen most of the fees listed and the government fees for me were less than $100.

rkhusky
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Re: Are these refinance closing fees reasonable?

Post by rkhusky » Thu Aug 09, 2012 6:54 am

Just checked my last refi. I did not have any of these fees that the OP lists: State Mort Tax Stamp fee, Intangible tax, Tax service fee, separate Mortgage and deed recording fee, or Survey. My origination was about $800, title services about $500, and appraisal $150. All the rest added up to less than $100: flood, credit report, recording fee. Perhaps some of the fees like title insurance scale with the price of the home.

diasurfer
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Re: Are these refinance closing fees reasonable?

Post by diasurfer » Thu Aug 09, 2012 9:47 am

mephistophles wrote:I refinanced recently on line with American Heritage Capital. All closing costs were paid by "credits". If you have good credit, this should work for you.
Same here. I would at least go to their website or Amerisave's and enter your numbers for comparison purposes. Their estimate of closing costs was basically accurate. In the end, it was completely covered by the credit and I got a 30 year fixed at 3.875% with no out of pocket costs. This was in May.

grapeape
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Re: Are these refinance closing fees reasonable?

Post by grapeape » Wed Jan 09, 2013 3:10 pm

Just an update, I recently closed on my penfed 5/5 arm refinance at 2.875 initially. Thank you everyone! Literally saved me thousands of dollars!

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