Hello, everyone and welcome back to a short, quick video today, Sean's, a name and mortgages are the game today, we're still in absolute crisis mode, but instead of continually talking about this, show that we call life right now, like everyone else is posting about. I want to get back to doing informative content that puts you in a better situation. So you probably know by now that I'm a license loan officer in Arizona and actually now Texas, I'm also trying to get licensed in more and more states. As so, many people who've seen my videos on YouTube end up reaching out and be awesome to help more and more people across the u.s..

So I'm working on that, but I get this question all the time how much if any at all, does it cost to refinance my home or my mortgage so today I want to break down all of the costs and potential hidden fees to you when you start The refinance process, because refinancing your home makes a ton of sense in some situations not going to get into those situations in this video. But refinancing can be a major stress reliever for you and if you don't know everything about what's going on and all the potential costs involved with it, then you might not be in the best financial situation and it's really important to take it from someone who does Like hundreds of refinance transactions every single year, because again, you really want to know what's going on, because your mortgage is basically your life. So first hit the like button on this video and let's get into it. Okay, jumping right in does it cost to do a refinance? Yes, 100 %? Yes, no matter what no matter, if you're working with an expensive lender like quicken or you're working with an independent mortgage broker like myself, there will always be some sort of cost with a refinance, even if it means there's no money out of pocket for you.

So I want to break down a full loan estimate, which is what you'll get when you start the refinance process, and this will show you all the fees that can be on there and some that you should definitely look out for and also note that not all Lenders are gon na, be sending you a loan estimate upfront so make sure you ask for one and if some can't send you a loan estimate, then just ask him to send you a fee worksheet, it's basically the same thing. So, let's look at just a basic loan estimate that I pulled off: Google, alright, the first things you want to double check, really quick on the first page. Is the loan amount make sure this amount isn't significantly higher than what you currently owe then double check the interest rate to make sure it's what you want and also, more importantly, double check the monthly payment if the monthly payment is what you want and what you're Comfortable with then we're good to go. Okay, once you double check those things on page one you'll get to move to page 2 and page 2 is what fully outlines and itemizes each fee you'll be paying during your refinance.

The biggest thing you'll want to drill down on is Section A or the first thing you see, which is the loan cost. This is typically the area where you can get screwed the most, depending on which lender you're, actually working with, because you'll potentially see fees like application fees, underwriting fees, processing fees, etc, etc. Those are what I like to call junk fees and they're really not necessary. It's just a way for lenders to make even more money off you, so you're gon na want to really pay attention to those.

But one thing that is really important in this section is the discount points. A discount point is a type of prepaid interest or fee that you can pay to lower the interest rate from what par pricing is that day or that you can actually get a credit for to help with some of your costs and just know that it's pretty Common to see something populate for discount points, it's pretty rare, not really normal, to see an exact interest rate. That is exactly at par pricing to where there's neither a discount point charge or a discount point credit as important to make sure that you're not paying more than 0.5 % of your discount point. If you are and if it's by a little bit.

It's no big deal, but if it's a significant amount of discount points, then it's usually not that worth it unless you're planning on staying not only in the home for a while, but in that specific mortgage for a while quicken. On the other hand, though, they try to charge people a full percentage point all the time, and again it's usually not worth it, but this section can make up the bulk of what your refinance costs actually are. So you really want to pay attention to it again. If you're working with like a quicken or a chase or Wells Fargo, the big companies you're gon na see lots of fees, they're, usually a bunch of discount points.

So just make sure you pay attention to those. Also, here's a refinance that I'm closing on for a client tomorrow and they wanted an exact rate. So there wasn't even any discount points for them, so there literally was zero dollars in loan costs, which is awesome and is something the big banks can pretty much. Never do but moving on you'll get to Section B, and this section is something you really can't do anything about.

These are things like an appraisal fee credit or fee flood surtax, blah blah blah blah blah? Is the boring section pretty much just skip it? You do, however, might want to look to see if you actually need an appraisal for your refinance, because not all refinance transactions actually need an appraisal and actually not all purchase transactions need an appraisal either, but that could save you about 500 to 600 bucks. If you don't need one, if you're working with a loan officer, who's actually good and willing to spend the time on your file, they can kind of play with some numbers and try to get what's called an appraisal waiver which allows you to get the mortgage or Get the loan without actually needing an appraisal and again that can just save you a little bit of extra money. You got about a 50/50 chance whether or not you need an appraisal or not, depending on the type of refinance, you're doing and loan-to-value and rate and property info when you buy it, there's so many things that get taken into account. But I'd say it's about a 50/50 shot if you need an appraisal or not, but again, here's the loan estimate for for my client closing on pretty light, pretty legit on the fees.

But then we get to Section C, which are the title fees and there's not really much. You can do about these. I mean sure you can shop around and try to get cheaper prices than what you see on there, but they're pretty standard across the board and they don't really fluctuate a ton. So I mean you can try to find some.

But again, I personally try to use some cheap companies, but even if you use a cheap one, verse and expensable - and it's usually a difference of like two to three hundred bucks, not much wiggle room and same with section II, just some boring stuff can't do much About so just kind of skip it, then you work into section F, and I actually typically tell my clients to completely ignore this section, because here's why your current mortgage has an escrow account, which is basically a bank account that has a bunch of prepaid property taxes And prepaid insurance payments just like chillin there, so you make these payments monthly, but your insurance policy is due every 12 months and your taxes are typically due every six months. So once you make your mortgage payment each month, you pay a monthly portion of those into your escrow account. Then, every six months a large amount gets deducted for taxes and every 12 months a large amount gets deducted for insurance. So you never feel these or see these payments because you're paying monthly on it and it all just happens automatically through your escrow account.

So, basically, when you refinance your home, your closing costs includes these taxes and insurance premiums or prepaids. The refinance will then start a completely new escrow account and the balance of your current escrow account will be refunded to you within 30 days after the closing your refinance. So I treat this section as a wash because you're going to be paying those things, regardless of a refinance or not and you're. Basically, just saying: okay, I'm no longer using this escrow account and I'm going to be putting money into this new escrow account this one's going to get refunded to me later, but all of my money up front in my closing costs or industry finance is going into This new account again you're just kind of moving money around, so I just call it a wash and then it's also same thing with section G.

It's just kind of a different way of breaking out what I just kind of explained. So I'm not really gon na get into why it's broken out differently, but it's pretty much the same thing with your escrow account. So realistically, if you want to look at this entire page as a whole and you want to find out what specifically, are your costs? Not the things you're going to be paying for, regardless of a refinance or not, but the things that are actually costing you money, then you're going to want to add up section a section B's see and section II. So when I add up the costs on the loan estimate from my client, that's closing tomorrow, it's about 1800 dollars, which is pretty standard.

I'd, say it usually fluctuates between one to two percent of the new loan amount. If you're working with a cheaper lender again, if you're working with quickie and then all bets are off so bottom line doesn't cost you to refinance your home. Yes, it typically costs you one to two percent of the new loan amount and, most time you don't really see these costs or feel these costs. When you do a refinance, because everything typically gets rolled into the loan, because most people don't really want to be paying anything out of pocket which is pretty standard and totally fine and if you're saving, you know 100 bucks a month or you know you're getting this Loan, that's making you in a better financial situation, then typically those one to two percent of costs that you're paying is usually really worth it and actually ends up.

You know breaking even a lot sooner than you think, and you can kind of do the math on it to figure out what your break-even point actually is, and one thing that a lot of people don't realize is if you're working with a good loan officer who Plans it strategically, you can actually skip two months mortgage payments so that ended up itself should cover the cost of your refinance. A typical mortgage payment is anywhere from fifteen hundred to two thousand dollars a month, depending on so many things. But let's just say it's. Fifteen hundred bucks a month, if you skip two of those, that's three grand and typically that's gon na - be the cost of your refinance.

So that's why I kind of a refinance really isn't bad at all. I know a lot of people think about refinance and think about these major costs involved, but that's pretty much it for this video. So hopefully you enjoyed it. I know it's not necessarily the most sexy topic that that I can make a video on for this channel but figured it could help you out and that's always my goal, I'm trying to provide as much information as I can and if you want more information when It comes to lending or thinking about it for refinance, makes sense or anything like that.

I've got tons of great resources on my lending website, lending Shaun Malka com linked down below for you, but hopefully you enjoy the video and if you did please hit that like button and also subscribe, if you're new around here always trying to release some great content On this channel to help you out but otherwise drop me a comment: I'd love to hear your feedback down below and until next time I will see you in the next video.