Thinking about refinancing your mortgage? It’s a savvy move that could save you big bucks in the long run. But before you dive in, let’s talk about the nitty-gritty costs you might encounter.
Application fees: When you apply for a new loan, there’s usually an application fee involved. It covers the lender’s costs for processing your application and can range up to $1,000. Some lenders might waive it, though, so keep an eye out for those deals.
Valuation fees: Your new lender will want to check out your property’s current value. This could set you back anywhere from $100 to $600, depending on the lender.
Lender’s mortgage insurance (LMI): If your home’s equity is less than 20%, you might need to shell out for LMI. It can be a hefty cost, so it’s worth factoring into your decision.
Discharge fees: Closing out your existing loan comes with a fee, typically around $200 to $400.
Break fees: Got a fixed-rate mortgage? If you switch before the agreed term, you could face break costs. These vary, so it’s worth checking with your lender.
Legal and settlement fees: Paperwork isn’t free! Both your current and new lender might charge legal fees for the paperwork shuffle.
Ongoing fees: Don’t forget about those sneaky ongoing fees that might come with your new loan. They could add up to $400 a year.
Now, before you panic at the thought of all these fees, remember this: refinancing can lead to serious savings. If you’re looking at slashing your monthly payments and the total cost to refinance is reasonable, it’s worth it in the long run.
Sure, there are costs involved, but the potential benefits—like a lower interest rate or better loan terms—could put a serious dent in your mortgage. And hey, that’s more money in your pocket!
Still feeling overwhelmed? Don’t sweat it. A knowledgeable mortgage broker, like us at SFP Financial, can crunch the numbers and make sure you’re making the best decision for your financial future. So, before you say no to refinancing, let’s chat and see if it’s the right move for you!
