| 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. |
