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I'm looking to refi my mortgage, and am wondering how reliable my broker's "good faith" estimate on my closing costs is. I am looking to break even in about a year, so this is pretty important. I was given the following estimates:
I guess my main concerns are going to be the appraisal fee, attorney's fees, and title insurance. Do those estimates sound about right for this area? The attorneys fees seem lower than I remember paying on my original mortgage. Is there anything else that might catch me by surprise?
Also, the broker is estimating 6 months of prepaid taxes for the escrow account. Can I negotiate that down to maybe 3 months since my tax bill was just paid?
Finally, he's estimating 30 days of prepaid interest. Is that normal? Does it depend on when I close? Would I be skipping a mortgage payment? I think this is the most confusing thing on the list.
That's all the closing costs he's estimating. I want to make sure I understand them correctly since closing costs are going to be a big deciding factor on whether or not it makes sense to refinance.
Interest most definitely depends on when you close. Loads of people want to close at the end or near the end of the month for this reason. Since that tends to be the busiest time it's also the least flexible for times/dates. I would close mid month and save yourself the hassle. You will most likely skip a mortgage payment since interest is paid in arrears. When you make your Jan. mortgage payment you're paying interest for the month of Dec., for example. I wouldn't count on it however & just consider yourself lucky if you do get to skip one.
You may be able to get a discount on title insurance if you already own a policy that you bought at the purchase of your home. The policies would need to be through the same insurer to qualify for a discount. I would definitely ask for it to be. Most attorneys are agent's for several different title insurance companies. You may need to provide them with a copy of your policy, but they should be able to get a copy through the company.
The prepaids for taxes are not neogiable. Sounds like you're getting all this info from a "Good Faith Estimate". Just remember the keyword there is "estimate". The lender will set the amount of months collected & you can't neogiate that AT ALL. Most lenders require a 2 month cushion in the escrow account. Your broker/lender providing the GFE is probably just preparing you for worst case senarios when it comes to the 30 days of interest and 6 months of taxes, but it's better to expect to pay more and be surprised when it's less than vice versa.
The credit report and appraisal fees seem fine to me. The Processing fee is one of those junk fees, but is usually not negoiable. If you ask I'm sure they'll give you an earful about what they do with the money. Attorney fee is fine also. I've seen $500 for a good 5 years or more.
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