Posts Tagged ‘Mortgage Closing Costs’

Can I Refinance at No Cost (or a Low Closing Cost)

No Closing Costs Refinancing Mortgage

Refinancing plans for no cost are great for people who do not want to live in their homes for a longer period of time. When you get a trade-off for a no closing cost refinance instead of an ordinary refinance, the difference is an additional interest rate of 2 percent. With a longer term view, it is not a beneficial deal, but in the short run it can help you to save huge amounts of money.

Start applying for no closing cost refinancing loans from either banks or other mortgage providers. Usually, refinance loans with no closing costs are not approved easily because they bring up lower up-front costs for the borrower. Always compare the rates of interest offered with the loan to those of the regular closing costs.

Other Costs Except Refinancing Closing Costs

Assess the loan agreement vigilantly and look up for any other costs besides the closing costs which make the loan unappealing. You must remember that if there are no closing costs associated with the loan it does not necessarily mean that there are no appraisal fees, settlement fees and any other added costs. Check out for such terms and conditions specifically, for example, the loan origination fees, which will add up to 1 percent or even more to the cost of the mortgage.

Calculate the number of years you are likely to spend in the house with the loan to make it inexpensive to pay for the closing costs on your own.  You can now evaluate whether it is a commercially viable deal in the long term or not. It means you will be paying higher amounts of monthly mortgage.

Contrarily, a borrower can be charged 3 to 6 percent of the loan amount if he or she wish to refinance at a lower cost. The borrower has the choice to reduce the closing costs to make them more affordable. Negotiation of closing costs and research will help the borrower to save huge sums of money on the mortgage refinance.

No Closing Cost Refinanacing Process

Start applying for a mortgage refinance with the present lender. You will be asked to fill up a loan application form. You will also be required to submit two months’ bank statements, two months’ pay stubs and two years tax returns. Make a request for Good Faith Estimate for your mortgage loan. Your present lender might also waive up certain amount of fees in order to help you retain your business. 

You may also apply with two other lenders as well. You can also ask them for Good Faith Estimates on their mortgage options. Now compare all of the Good Faith Estimates. Pick the lowest estimate and ask the lender to strike that offer with the least amount of closing costs, if applicable.

Ask your lender to waive off the closing costs by means of increasing the interest rate. The lenders receive a combination of interest rates and closing costs. As a rule, higher rates of interest ensure greater profits to cover up the closing costs.

However, you must ask the lender information on streamline refinancing. It adjusts the term and rate, but not any part of the loan amount. This kind of refinancing reduces the fees and closing costs up to a great extent.

Read Related Articles:

• FHA Streamline Refinancing Guidelines
• Refinancing With Bad Credit History
• Refinance Scam Radar – How To Spot Them
• How To Negotiate Refinancing Costs Down 
• Mortgage Closing Costs & Fees Explained

FHA Streamline Refinance – No Out Of Pocket Closing Costs

FHA Refinance – No Out Of Pocket Closing Costs

 There are many FHA refinancing closing costs which need to be paid during an FHA refinancing process. These closing costs may include all the fees and costs summed up in the FHA refinance process. Except from the FHA streamline refinance – ‘no out of pocket closing costs’ which will be explained here, there are other ways the FHA allows borrowers to pay their closing costs.

Closing costs include of all the fees and costs which had to be paid during the approval of the refinanced mortgage. Costs such as appraisal fees, title fees, lenders fees, and government fees connected to the FHA mortgage processing. FHA refinance streamline programs ’no out of pocket closing costs’ can be very appealing to customers who wish to refinance but can not afford paying the current closing costs.

The closing costs for a FHA streamline refinancing mortgage can be 2% of the mortgage loan. This means for every $100,000 you refinance, the closing costs will be around $2000. When homeowners who refinance do not have enough cash to pay the closing costs and the FHA agrees, the closing costs would be mounted into the new mortgage loan.

‘No Closing Costs’ Does Not Mean It Is Free

It might be tricky to think that the fact that the FHA streamline refinancing has a no closing cost option, it is free of charges. It is certainly not. There are two main ways to complete the transaction without pulling cash out of your pockets.

The first option is when you mount the closing costs into the new mortgage. In this case you will be paying an interest as agreed, on a slightly higher amount of mortgage.

The second option in FHA streamline refinancing is that the lender agrees to pay off all the closing costs (which becomes a ‘no out of pocket closing costs’ for you) in exchange to offering a slightly higher interest rate.

Which Closing Cost Payment Option Is Better

Now (Sep’ 2011) when a echo sound was heard when the mortgage interest rates have hit yet another ‘ever low’ rates (60 years low), requesting the first an option may be a smart move. When interest rates are so low, $4000 additional mortgage will overthrow you off the deck. You should forward this issue to your current mortgage divisor, to calculate the impact it will have over your future mortgage payments. 

For a $300,000 mortgage the closing costs may reach $9000. The second option (lender paying in exchange for a higher rate) may not be financial, but may be the only option if the closing costs fees are not affordable. Even though, today (end of 2011)  when the national interest rates  have reached rock bottom adding a small percent may still be acceptable.

Win-Win – No Out Of Pocket Closing Costs

The option not to pay the closing costs is a fine option to the borrower, but it is also a fine option for the lender, as they will be gaining profit twice.

First time would be when the mortgage sum increases, the lender will make more profit as the interest rate will be on a larger sum. The second thing would be that the lender will agree to a no out of pocket closing costs in exchange too slight increase in the rate. They will be making higher profit on the whole sum.

When No Out Of Pocket Is Not Permitted

There are several scenarios in which the FHA streamline refinancing will not approve a no-out-of-pocket closing costs solution. This can be if the FHA streamline refinanced mortgage does not have enough equity (97.75%) according to the FHA appraisal evaluation report. Though appraisal report is not needed for the FHA streamline refinancing, the no-cash-out will be possible for equity over 97.75% or 97.75% of the previous loan amount.

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Read More Relevant Posts

• How to Refinance An Underwater Mortgage
• How To Detect Refinancing Scams
• FHA Streamline Refinancing Guide 2011
• Cash-Out Refinancing Requirements

Refinance Fees Refund & Cancelation Rights

Refund Rights When Canceling a Refi Deal

Many people might not know, but the Truth in Lending Act protects them as borrowers and allows them to back off a closed loan deal, and get 100% of the monies they have paid and invested back. If the refinance deal does not satisfy the borrower or they have discovered hidden fees or have cooled down after the signing meeting, they are still entitled for a full refund. The refinance cancellation and refund will be on all refinance fees and costs, even those paid already to third parties.

The refinance cancellation is not a common procedure by borrowers, at present times. In the past when the interest rates were racing up or down there were numerous cancellation of refinancing deals, when the locked rate became a ‘bad deal’ when it was time to sign the loan documents. The Truth in Lending Act protected borrowers, and permitted to back off from a deal they do not wish to carry on and complete.

The Truth in Lending Act is not blind to the lenders rights for honest protection, and there are some limitations and regulations, when and how the refinance mortgage deal can be canceled. There are also limitation in which cases the refinance refunds are entitled too.

Canceling Before The Closing Meeting

Be careful not to mix up some basic terms, canceling before the signing of the documentation is not protected by the Truth in Lending Act. In case you decide to back off a deal before documentation has been filled, there might be a state or lender penalty! This penalty may reach $1000!

If nothing dramatic has occurred and there was no drastic changes in the lenders terms and refinance process, you better wait and sign all the documentation, and only afterwords, use the right and protection the Truth in Lending Act to cancel the refinance transaction deal.

The Right of Rescission Protection

The Truth in Lending Act protects the borrower from the moment the mortgage refinance loan papers are signed, and within the 3 day rescission period.

The right of rescission, is given to the borrower before they commit themselves into one of life’s most challenging deals, it is a right that is given to prevent people from signing papers under pressure, or signing documents they do not fully understand.

 This law protects any borrower taking a mortgage and home loan, but unlike regular mortgage borrower, or first time buyers, the refinance Right of Rescission permits total refund of money paid by the borrower in the process.

The full refund of fees and costs paid by the borrower include those the lender have collected and paid to third parties like appraisal fees, inspection fees, broker fees or title search fees. Even if the fees have been paid directly by the borrower (and not by the lender) to the third party, they are refundable by the Truth in loans Act.

Fees and costs which are not refundable are those which not directly connected to the credit transaction, as fees paid for home improvements or costs for for a building permits.

Which Refinance Loans Are Protected By The ‘Right of Rescission’ 

The Right of Rescission refunds is not automatic, and not eligible for any mortgage refinancing process. See below to learn in which terms the refinance fees refund is covered by the law.

• New Lender - The Refinanced mortgage needs to be by a NEW lender. If refinancing with the current lender, the refund rights do not stand for you.
• Getting A Larger Home Loan Amount – The 3 days rethinking is allowed by the Right of Rescission only when a larger amount of loan is involved in the refinancing process.
• Cash Out Refinancing – If you are taking cash out refinancing, and taking a larger amount against your home, the 3 days rescission period counts for final acceptance of the new mortgage terms and payback schedule.
• Home Needs to Be Principal Residence – The right of rescission on refinancing applies to events when the main residence is at stake, and emotional pressures might have been part of the decision making.
• Home Equity Line and Installment Loans – Though these are not refinancing loans, borrowers of these kind of loans have the right to cancel the loan within 3 days from the mortgage/loan closing meeting.

Follow These Exact Steps For Refinance Cancellation

Unfortunately many people do not follow these steps as they have been requested by the law, in the exact manner the law abides. If for example a person calls the mortgage broker and tells him he have decided to use your right for cancellation by the Truth in Lending Act (TILA) and requests a refund, he is not entitled for a refund nor for the cancellation to take place.

The exact way to rescind during the rescission period should be:

• Three Days Notice - The law allows to give a cancellation notice within 3 business days. Day ‘One’ is the day the refinance documents have been signed. The law specifies that the rescission period will be over (like Cinderella) at ‘Midnight’ of day ‘Three’.
• Business Days – These 3 business days include Saturday (but not Sundays) and do not include legal public holidays. So If you have signed refinance papers by Thursday morning, the rescission period will be over at midnight 24:00 of Saturday.
• Written Document – The only way to rescind and cancel the loan is by writing a letter to the lender. Any other way such as calling or meeting them at the office is not enough to be covered by the law.
• Documented Notice Delivery – It is best that your cancellation letter will be documented by some way to prove the delivery time was within the 3 day limit. Request a signed approval from the lender for the rescission letter delivery otherwise the lender might claim the notice was delivered beyond the 3 day limit.

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Read Now These Relevant Posts:

• When Is Refinancing a VERY Bad Idea?
• Refinancing? Do Your Homework!
• How To Get 800 FICO Score
• All About Cash-Out Refinancing

5 Critical Steps At Mortgage Closing Meeting

Step by Step Tips When Closing Your Mortgage

The steps at the mortgage closing meeting can be very important, and should be planned ahead, and done correctly. The lender and the mortgage broker have been doing such mortgage closing meetings quite a lot, and can review this process with you. Here you can read the steps which will be done from the beginning to the end of the meeting.

Invest In Education

If you are in a process of a mortgage shopping or approval you must invest in some mortgage education. Now that is not free article reading like you are doing know, thats just filling your ceriousity.

The tips and tricks you realy need to know, you will not find ‘free’ on the internet. If you think education is expensive… try ignorance. This becomes true when it comes to mortgages. People just know too little about the process, and the lenders rape them with fees and costs that mey be easily avoided. Your golden hen will be learning ‘inside information’ from a former banker who have broken the lenders ‘code of silence’.

See – The Mortgage Loan Tips.

You will see below 5 critical steps and tips to know prior to the mortgage closing meeting – they will be highlighted.

Who Will Be Attending The Mortgage Closing Meeting

As mentioned before, your mortgage broker, mortgage attorney or the lender may have been in many mortgage closing meetings. The best advice would be to ask them how they expect the meeting to take place, which documentation and proofs they might want to see. This is important, because when these requests come up in the meeting and all the eyes are turned at at you, you better be ready.

Unlike all the meeting which you have been attending until now, the closing meeting may be a bit more crowded. All the people who have are connected to th deal should be there. Tip 1 - Ask in advance who will attend so you know can prepare better, if the seller brings an attorney – bring an attorney too!

Who may be attending this meeting :

• You – The buyer and borrower.
• Your mortgage broker
• The Seller (and his/her spouse partner)
• Their mortgage broker
• The lender and their attorney
• Or Title insurance or Escrow company which are permitted in some states to manage these meetings.
• Your attorney (recommended) or the seller attorney if they have one (recommended)

Prepare The Documentation For Closing

At the mortgage closing meeting will a lot of documentation signed and reviewed. Make sure you ask and prepare th documentation exactly as requested. If you think that you have not collected all the papers and approvals, contact the lender and double check. If you have difficulty knowing which information will be expected, ask even twice to be sure, you know.. ’better safe than sorry’ is relevant to the mortgage closing meeting too.

Here are some of the documents and issues commonly YOU will need to be responsible of completing before the mortgage closing meeting:

• Homeowners Insurance – The lender would like to see that you har insured by insurance for any physical damage to the property. Tip 2 - Make sure you know exactly which hazards the insurance you do covers, as the lender may want a specific insurance on common or uncommon hazards like floods, fire, earthquake, tornado storms. That is why this is called too Hazard insurance.
• Title Insurance – This insurance protects the lender from last minute ‘surprises’ – They have seen everything and been in such positions that anything may be possible for them like “unknown heirs”, forgery, credit identity theft…
• Title search report – This is important to have as it is the legal documentation proof that the property is clean from any liens, negative marks and it is ready for the legal ownership to be transfered.
• Termite, well, sewer or septic certificate – Some lenders will ask for these items to be pre-checked and certified. This may be part of the appraisal check “as is”, or may be items that must be repaired prior to the completion of the mortgage transaction. See the FHA appraisal guidelines 2011 review.

What Will You Be Signing At The Meeting

Documentation For The Mortgage closing meeting (might vary from state and property involved)

• HUD-1 Settlement Statement – This is the final document with the fees, credits and costs concerning the real estate terms you and the sellers agreed upon.  The  HUD-1 Settlement Statement may be slightly differnt from the Good Faith Estimate (GFE) document. Tip 3 - The fees in the HUD-1 should not be ore than 10% higher from those presented at the GFE. Tip 4 – Get the HUD -1 document three days in advance, as you may be requested to bring a bank cashier’s check, because your personal check may not be accepted.
• Truth in Lending (TIL) disclosure – This is part of the Truth in Lending Act (TILA), is a document you should have received by the lender, it summarizes your expected annual percentage rate (APR) payments. In this document there will be all the figure about monthly payments, rates, interests, fees and all the mortgage financing figures. Tip 5 - Since the TIL may be changed over the period of time and party agreements. By law your lender must send you the most recent TIL document they have, if had been modified they must allow you to see the recent one before the mortgage closing meeting.
• Promissory Note – This is a document where you sign that you will be paying all th payments on time. It is a ‘mirror’ document to the Truth in Lending, it summarizes your part of the deal.
• Loan Documentations - These are the documentations of the mortgage loan, with all the lien explained that if you are late on your payments, your new home you have just bought becomes the property of the lender. To prevent this from happening – You can learn how to ‘smash’ your mortgage.
• The Deed – This is the document which transfers the ownership of the home over to you – Congratulations! You are a home owner!

Well, you are not a homeowner yet.. the home belongs to the lender until the last payment is fully paid… For the best mortgage with the lowest rates and no ‘junk’ fees make sure you get the  Mortgage Loan Foolproof Tips.

How to Negotiate Loan Origination Rates Down

 Negotiate Loan Origination Rates

Negotiating is not only for pros, you can negotiate yourself just about anything. You will never make money faster than around the negotiating table.

When you decide that you need a mortgage for buying a new house, you turn to find a lender who is willing to borrow his money to you. Like any other place where you find someone to outsource a job, that will cost you money. This origination fees are fair to be paid, but they are also like all mortgage closing costs.. negotiable – meaning they can be reduced even more by you.

Once you reach the end of this page, you will see a link to the most vital aid you will need right now – ‘Mortgage Loan Tips’. This program will teach you how to avoid paying lenders ‘junk’ fees and staying away from brokers ‘traps’, and why some people get the lowest mortgage rates while others pay much more!

What are loan origination fees? 

The first step to get your own mortgage and home loan will be a process of pre-qualification with the loan officer who helps you through these first steps. Since it is wise to get professional financial aid through this process turning to a loan broker or loan officer is the smartest move for you in this stage.

Before the bank or lender agrees to give you hundreds of thousands of dollars there is a simple qualification step to pass.

It is very common that the bank or lending company will ask the loan originator to supply certain credit, asset, employment, and housing information to a specified bank or lender to initiate the underwriting of the loan application. 

Loan originators are loan officers (mortgage brokers, or simply sales people) it is their job to make sure you get all the qualification papers and documentation right. They know what is important, what federal laws or countrywide blue print are needed, they can answer some taxation maters and understand in house and mortgage insurance. 

Loan origination fees are paid to the loan officers who do this process.

Mortgage Closing Costs Negotiation Tricks

A loan origination rate is a negotiable payment outside the mortgage loan payments. This originating loan fees, you will be asked to pay in cash at mortgage closing. So before you hire a loan officer, ask what are the fees that you will be needed to pay through the process?

1. The first rule of negotiation mortgage fees is information! Know what the average loan originating costs are. Search loan brokers’ websites and ask for an offer for service. Get at least 3 offers before you decide who to begin with.

2. The second rule of negotiation home loan costs is have a BATNA (best alternative than negotiated agreement) a secondary offer from a loan officer you might go with if the first deal will blow away. Having a second offer in hand makes you able to leave the table if your requests are not met.

3. The third rule when you negotiate mortage closing costs is – Always show disapproval from the loan officer first offer. Make a face, move in your chair, raise your voice in shock “what?! A thousand dollars! That’s way over what we planned to pay”

4. The fourth rule – immediately declare a number! Now stretch your limits! Try to ask for a ridicules percentage reduction. If the loan officer asks for 1000$… Don’t ask for a polite discount of 10%… (900$) Say you are willing to pay HALF! Now both of you KNOW you will meet somewhere in the middle… (750$)

Mention here you have another offer – your BATNA (don’t say how much fees they asked for there !) just say it is much lower than what you are asked to pay now…

Because the loan officer wants the deal and he is already involved deeply with you, watch him cut his fees lower than you imagined.

If you are a step away from a mortgage loan, stop and do not do another move, before getting the Mortgage Loan Tips – It will save you more money than you ever imagined, with some mind blowing insights only professional mortgage brokers know.

More to know on origination fees and rates

#1 The origination fee is deductible if it was used to obtain the mortgage and not to pay other closing costs. The IRS specifically states that if the fee is for items that would normally be itemized on a settlement statement, such as notary fees, preparation costs and inspection fees, it is not deductible.

# 2 There are also Mortgage Discount points: These are actually prepaid interest on the mortgage loan. The more mortgage points you pay, the lower the interest rate on the loan and vice versa. So if you have enough cash on hand, you can pay them in advance and lower your mortgage interest rate.

# 3 Borrowers typically can pay anywhere from zero to 3 or 4 points, depending on how much they want to lower their rates. This kind of point is tax-deductible

# 4 If you have enough mortgage cash on hands, you can pay mortgage origination rate and save money on a lower mortgage interest rate. In any case you are in a great position for negotiation with the bank or loan officer for a better interest rate… or you walk from the deal…

Negotiating Fees Conclusion

While some people learn how to get lower rates, others pay usually much more… Invest in mortgage ‘tips & tricks’ education Check Here to Learn More.