Mortgage Fees and Points: What you can Expect to Pay Refinancing Your Mortgage

If you are in the process of applying for a new mortgage or refinancing your existing mortgage there are a number of fees you will have to pay to secure the loan. Here are the basics of costs and terminology associated with your taking out a new mortgage.

Mortgage Interest Rates

The interest rate you will qualify for on your mortgage depends on the lender you choose, your credit score, and prevailing interest rates. Qualifying for the lowest rate will save you thousands of dollars in finance charges. When you compare loan offers it is important to compare all aspects of the mortgage, not just the interest rates. If you focus only on interest rates you will probably overpay on the lender fees and closing costs.

Discount and Origination Points

Points come in two flavors: discount points in the form of pre-paid interest and origination points, which are your lender fees. Discount points are paid in exchange for a lower interest rate or more favorable loan terms. One discount point equals one percent of the loan value, paid at closing. The advantage of paying discount points is that you will be able to deduct this fee from your Federal income tax.

Closing Costs

Closing costs encompass a number of different fees, some paid to the lender, some to the title company, and others to the attorney. Closing costs vary from one lender to the next so it is important to compare these expenses, find out who they are paid for, and negotiate with your lender for more favorable fees, especially if you have good credit. You can learn more about finding the best mortgage without overpaying for the financing by registering for a free mortgage guidebook.