Closing Cost Estimates

To take full advantage of lowered interest rates, your lender may charge 3% to 6% of the principle, or total amount you borrow. For example, if your original mortgage was $80,000, and you've paid $20,000 to have a remaining principal of $60,000, then your refinancing costs will average $1,800 to $3,600.

Today, since market conditions are favorable for refinancing, several lenders offer low to no-cost refinancing in return for a slightly higher interest rate, or increased loan amount. Typically, the lender will build in fees that are usually paid up front to save you out of pocket costs. In the case of low-cost refinancing, you may have to pay something like $500.

Pay careful attention to the Hud-1, also called settlement statement, from your original mortgage as it will outline all of your closing costs. You will see “pre-paid expenses” on this statement. Pre-paid expenses include pre-paid interest, pre-paid taxes and insurance. Even if you are rolling these expenses up into the mortgage amount, settlement charges can take you by surprise at the closing table.

Because costs may vary significantly from area to area and from lender to lender, the following are estimates only. You may be able to avoid many of these fees by using documents from your previous closing, The appraisal, survey and title search from your previous closing may still be valid for your second closing. Make sure you have all of your closing papers in a safe place. Your actual closing costs may be higher or lower than the ranges indicated here:

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