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Refinance Considerations
Refinance Costs
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6 of 10
Refinance Considerations
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When you refinance your mortgage, you usually pay off your original
mortgage and sign a new loan. With a new loan, you again pay most
of the same costs you paid to get your original mortgage. These
can include settlement costs, discount points, and other fees. You
also may be charged a penalty for paying off your original loan
early, although some states prohibit this. The total expense for
refinancing a mortgage depends on the interest rate, number of points,
and other costs required to obtain a loan. To obtain the lowest
rate offered, most mortgage companies will charge several points,
and the total cost can run between three and six percent of the
total amount you borrow. So, for example, on a $100,000 mortgage,
the company might charge you between $3,000 and $6,000. However,
some companies may offer zero points at a higher interest rate,
which may significantly reduce your initial costs, although your
payments may be somewhat higher.
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