I would like to refinance my mortgage but I was shocked when I got a Good Faith Estimate from a lender. Is it my imagination or are the costs a lot more than they were when I bought my home?
It is probably not your imagination -- the costs of a mortgage refinance can be higher than a purchase mortgage for several reasons. First, when you bought your home, the seller probably split many of the costs with you. In most parts of the country, it's customary for home sellers to pick up some or most of the fees for title insurance and escrow services as well as transfer taxes and recording fees. In fact, if you financed your purchase with an FHA mortgage, it is
required by law that you do not pay some of these fees when buying a home.
Title charges comprise some of the biggest fees involved in a home loan refinance. Lenders require title insurance as a condition of funding your loan. Two types of policies are available: an owner's policy and a lender's policy. The lender's policy insures that the lender's security interest in the property has priority over claims that others may place on your property. The lender's policy does NOT protect you. Title insurance guarantees against losses from any defects in title that may exist in the public records at the time you purchase or refinance your property, and certain other risks described in the title insurance policy. Possible title defects include:
Errors or omissions in deeds
Mistakes in examining records