Refinance closing costs are a total scam (insurance, loan, interest rate)

[platon20]

Current house value: 650,000
Loan outstanding amount: 200,000
Current interest rate: 6.2%
New interest rate: 3.05%
Credit score: 810
Closing costs estimated: 7000-9000


This is absurd. Please tell me how these companies can get away with ripping people off. Please tell me why a 650k house requires a 9k closing costs but a 200k house only requires 3k. Please explain to me why there's an extra 6k for the bigger house.

So I want someone to explain to me how a lender's costs to close a refinance loan on a 650k house are three times higher than for a lesser valued house.

[Bette]

Closing costs include lender's fees, origination fees, credit report, appraisal, tax service fee, flood cert fee, title fees including settlement fees, lender's title insurance, endorsements, government recording fees (intangible tax, doc stamps) and prepaid items (setting up your new escrow account).

Depending on the time of year, your escrow fees may be the highest fee but remember, you will also get back what you currently have in escrow after closing (from your current lender).

[janet bubby]

Originally Posted by platon20

Current house value: 650,000
Loan outstanding amount: 200,000
Current interest rate: 6.2%
New interest rate: 3.05%
Credit score: 810
Closing costs estimated: 7000-9000


This is absurd. Please tell me how these companies can get away with ripping people off. Please tell me why a 650k house requires a 9k closing costs but a 200k house only requires 3k. Please explain to me why there's an extra 6k for the bigger house.

So I want someone to explain to me how a lender's costs to close a refinance loan on a 650k house are three times higher than for a lesser valued house.

What did your lender say when you asked?

[MsVulcan500]

Originally Posted by platon20

Current house value: 650,000
Loan outstanding amount: 200,000
Current interest rate: 6.2%
New interest rate: 3.05%
Credit score: 810
Closing costs estimated: 7000-9000


This is absurd. Please tell me how these companies can get away with ripping people off. Please tell me why a 650k house requires a 9k closing costs but a 200k house only requires 3k. Please explain to me why there's an extra 6k for the bigger house.

So I want someone to explain to me how a lender's costs to close a refinance loan on a 650k house are three times higher than for a lesser valued house.

Did you get a loan estimate? The high closing costs are probably in your escrow account for taxes and insurance. Taxes and insurance are more expensive on a higher valued home. They can collect up to 14 months of taxes and insurance depending on when they are due to be paid again. This is up to a full year plus 2 months reserves. This amount is in your escrow account with your current lender and will be refunded after the loan is paid off.

If you compare only the lender, title, and government fees for the 2 different valued homes you will probably find they are similar (if they are in the same market). Don't consider the prepaids or escrow amounts. Those items pretty much end up being a wash since they get refunded from the current lender.

[adjusterjack]

Originally Posted by platon20

This is absurd. Please tell me how these companies can get away with ripping people off.

That's easy.

People who want the money bad enough will do whatever the mortgage company vultures want them to do.

That answer makes your other questions moot.

If you don't want to pay outrageous closing costs, then don't refi. It's that simple.

Use this amortization calculator to see if it even makes sense to refi.

Mortgage/Loan Calculator with Amortization Schedule

[Jkgourmet]

Go to the bank that has your current mortgage. I'm paying a less than $1k (no full appraisal necessary). 30 year at 3.5% dropping to 20 year at 2.625%

[platon20]

I have a combo mortgage currently from when I bought the house.

Home value: 650k
Credit score: 800-810 depending on the CR agency
Loan #1: Balance 388k, 4.375% interest
Loan #2: Balance 57k, 5.5% interest

Property taxes: $0.645 per $100 valuation

My escrow account currently has 14k in it.

I want to get a lower interest rate on a 30 year note and I also want one single refinance loan to cover both the other loans, I don't like dealing with 2 different loans.

I don't want to pull any money out or do anything else. I'm seeing a lot of rates advertised at 2.5-3% right now. I put the numbers in the refinance calculators and I can save up to $600 per month with a refi.

Questions:

1. So if I refinance without taking any money out, the old escrow account just gets pushed over to the new escrow account and I don't have put up an additional 10k for taxes or insurance?

2. If I get a new refinancing loan to consolidate my 2 combo loans, is that going to give me a less favorable interest rate?

3. The online lenders are giving me much better interest rates than the big banks are. However I'm sure some of them are hard to deal with. Has anybody had a good experience with an online lender like Better.com, Sage, LowRates.com, Interfirst, Amerisave, etc

[adjusterjack]

Originally Posted by platon20

I have a combo mortgage currently from when I bought the house.

Home value: 650k
Credit score: 800-810 depending on the CR agency
Loan #1: Balance 388k, 4.375% interest
Loan #2: Balance 57k, 5.5% interest

Questions:

1. So if I refinance without taking any money out, the old escrow account just gets pushed over to the new escrow account and I don't have put up an additional 10k for taxes or insurance?

That might happen if you get a new loan with the same lender as the escrowed lender but assuredly not, if you get a different lender. You'll have to put up those costs at the getgo and wait for a refund when the old loans are paid off.

Originally Posted by platon20

2. If I get a new refinancing loan to consolidate my 2 combo loans, is that going to give me a less favorable interest rate?

Not necessarily. Borrowing $445,000 on a $650,000 home is less than 70% loan to value. You should be able to qualify for a low rate. You might even to better with a 15 year loan instead of another 30 year loan, if you can afford the payment. Get the house paid off sooner. You don't want to be the prey of the mortgage industry vultures forever, do you?

[Gaylord_Focker]

Originally Posted by platon20

Current house value: 650,000
Loan outstanding amount: 200,000
Current interest rate: 6.2%
New interest rate: 3.05%
Credit score: 810
Closing costs estimated: 7000-9000


This is absurd. Please tell me how these companies can get away with ripping people off. Please tell me why a 650k house requires a 9k closing costs but a 200k house only requires 3k. Please explain to me why there's an extra 6k for the bigger house.

So I want someone to explain to me how a lender's costs to close a refinance loan on a 650k house are three times higher than for a lesser valued house.

This is like asking how can a car dealer get away with what they're doing. The answer is because they can. Both companies are dirtbags.

Your rate seems high for your credit

[SmartMoney]

Originally Posted by platon20

Current house value: 650,000
Loan outstanding amount: 200,000
Current interest rate: 6.2%
New interest rate: 3.05%
Credit score: 810
Closing costs estimated: 7000-9000


This is absurd. Please tell me how these companies can get away with ripping people off. Please tell me why a 650k house requires a 9k closing costs but a 200k house only requires 3k. Please explain to me why there's an extra 6k for the bigger house.

So I want someone to explain to me how a lender's costs to close a refinance loan on a 650k house are three times higher than for a lesser valued house.

What state?

How much of that is for Escrows and Prepaids (which should be backed out because you will get those back from your current lender).

You have someone that did not explain things to you. You need to speak up and ask them to walk you through the costs. There are many great options out there, like take a rate with a lender credit and pay next to $0 in costs. It's being done every day.