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PostHeaderIcon Cash Out Refinance & Mortgage Cost

A cash out refinance consist of a borrower choosing to take cash-out in addition to their existing loan amount. The new loan balance will consist of the current loan balance plus the amount that was wanted by the borrower. This type of refinance is typically referred to as cash out refinance. This is common when a client wants to make home improvements or pay off other debt. With a cash out refinance your actually refinance more than you currently owe and taking the difference for your self.

Mortgage costs can be very easily explained, all mortgage costs are on what is called a HUD. A HUD tells you everything you did on the refinance or on the purchase with all the costs that were included. These costs are usually Lender fees, third party fees, and prepaid items. The lender fees are the origination fee, points and application fee, appraisal fee, and credit report. The origination fee is what the lender charges for the work in evaluating and preparing the mortgage loan. Points can either be discount points or buy down a point which is charged to the borrower for a lower interest rate. When a buy down is charges this means that the rate had a hit on it so then the lender charges the borrower an extra point to get that rate. An appraisal fee is typically 300 or 400 hundred dollar and this fee can be paid at the door. An appraisal must be done by a certified real estate appraisal. Applications can be taken over the phone or in person, some companies have a fee for an application and some don’t. Pre- paid item are not considered to be fees because these must be paid regardless or refinancing or not. This is what is called escrows pre-paids are the taxes and insurance of the property. These can be included in your monthly mortgage payment or not. Third party fees are the title and closing costs fees. Closing costs fees are underwriting and processing fees. The title fees are the cost of examining the public record to confirm ownership of the real estate property. This fee also takes care of the cost of a policy, typically issued by a title insurance company, which insures the borrower to a specific amount for any loss because of discrepancies in the title to the borrower property. There are many different types of mortgage fees and these all can be shown to a client by asking for a good faith estimate. The good faith estimate is required by law to be given to client once the application process is complete.

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