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You will likely incur additional fees if you are refinancing with the help of a government housing program like the Rural Housing Service (RHS), Federal Housing Administration (FHA) and Veterans Affairs. According to The Federal Reserve, the RHS fee is 2 percent of the amount of your loan, as of October 2010. The FHA charges insurance premiums, which are estimated to be 1.75 percent of the loan being refinanced. The VA fee varies with the size of your down payment. A higher down payment reduces the amount of your fee while a lower down payment increases the fee. The range of VA fees is between 1.25 percent and 3.3 percent of your loan.
Loan origination is the process lenders use to establish your new loan. The process includes checking the credit of each applicant, evaluating your loan, document preparation and lawyer and notary fees. Combined, the cost of the loan origination process ranges approximately from $2,195 to $3,505, as of October 2010.
Lenders also conduct an evaluation of your home to determine its condition and assess the value of the home. According to the Federal Reserve, an inspector carries out an inspection of your home to establish structural integrity. An inspection of this kind ranges from $300 to $500, as
of October 2010. In addition, lenders also appraise the value of the home to ensure that the loan amount at least matches the value of the home. The Federal Reserve advises that if you have record of a recent property appraisal, your lender may waive the need for a new appraisal. The estimated cost of a property appraisal fee ranges between $263 and $444.
Lenders charge mortgage borrowers points in return for a lower interest rate or other favorable terms. According to the Federal Reserve, 1 point is equal to 1 percent of the amount of the loan you are refinancing. If a lender charges you 1 point to refinance a $150,000 loan, your payment is $1,500 in addition to the rest of the refinancing charges.
The total of these refinancing fees can add 3 percent to 6 percent of the amount of your loan. According to the Federal Reserve, refinancing costs are about 3 percent of your home’s price. In high-tax regions of the country, refinancing costs commonly reach 5 percent to 6 percent of your home’s price. To illustrate the impact of refinancing fees, assume you are refinancing $100,000. Applying Federal Reserve estimates, the cost can be as low as $3,000 and as high as $6,000, which is usually paid up front or rolled into the refinanced loan.