Closing Costs in a Refinance

Published on December 19, 2016

– 5 min read

Refinance closing costs can vary considerably depending on the type of loan you choose and where your property is located.

They can typically be financed (or “rolled-in”) so you don’t pay up front, but you still do pay for them over time and you’ll pay interest on the costs by financing them.

The list below is by no means exhaustive, but you can expect to pay for some of the following items:

  • Appraisal – This is generally paid to the appraisal company to provide the market value of your home. In Clara’s case, we collect an initial appraisal fee upfront from you that is used to pay the appraisal company. An appraisal is required to close your loan.
  • Credit report – Some lenders charge you for this, but it’s usually less than $20 per borrower. In Clara’s case, we pay the credit report fee for you.
  • Closing / escrow fee – This fee is paid to the title company, escrow company, or attorney who is the independent third party completing the transaction. The amount depends on which state you’re in.
  • Pre-paid interest – Loans can close on any calendar day. Sometimes there’s a small interest payment due to shore up any interest accrued before your first full payment.
  • Lender’s title insurance – This is the insurance a Lender requires you to pay in case someone else makes a claim to your property during the life of your loan. It protects only the Lender’s interest in the property. You can also opt to have Owner’s Title Insurance which protects your interest in the property––not just for the life of the loan, but as long as you own the property. Many people opt to have this coverage.
  • Lender fees – Also known as “Origination Fees” or “Lender Costs.” This can be a percentage of your loan amount and can add up to thousands of dollars. With the Loan Estimate form, it’s easy to see these fees (under “Closing Costs Details” in Section A). The Loan Estimate allows you to easily compare your loan quotes from different lenders. You can also compare fees by looking at the APR. The higher the APR relative to the Interest Rate, the more fees that are included.

At Clara, we charge a flat origination fee regardless of your loan amount. This helps keep our pricing transparent.
 
If you have questions about closing costs, you can chat with one of Clara’s licensed Loan Specialists.   To see what your refinance options are, click here.

Jack Grace
Jack Grace is a licensed Loan Specialist at Clara. Outside the mortgage world, you’ll find him at a Giants game in San Francisco, at the beach, or exploring the Bay Area with his dog, Lucy.
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