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PostHeaderIcon Closing PMI

Closing refinance has fees that come along with it. Closing costs are the fees that one must pay during a refinance. There are all types refinance mortgage closing costs. These costs are lender fees, third party fees, and pre-paid items. Lender fees are made up of origination, points, application, credit report and appraisal. Third party fees are made up of company closing costs, title, and title insurance. Pre-paid items are not really considered to be closing costs, these are items you pay if you refinance or not. They include your taxes and insurance of your property. As a whole closing costs typically range from two to six percent of your loan amount. As the process of the refinance has began you as a borrower can ask for a good faith estimate. This good faith explains all the costs and all fees. Also if there is enough home equity, the costs may be rolled into the loan. This would mean that at the time of the closing no out of the pocket money is required. Closing costs also fit into two categories; recurring fees and non-recurring fees. Recurring fees are your monthly payments, your taxes and insurance. Non-recurring fees are points, lender fees, and application fees.

Mortgage taxes are the property taxes that can be included the loan. Property taxes an annual local governmental tax on real property or personal property based on a tax rate. If a borrower decides they do not want to have the taxes included in the loan than there loan to value must be under eighty percent otherwise they are required to be included. In a mortgage you can also have your insurance included with the taxes and this is called an escrow account. Mortgage escrow accounts make sure that borrowers’ property taxes, fire and hazard insurance premiums, mortgage insurance premiums and other escrow items are paid on time. Mortgage taxes can be a hassle during the times that they are due, so an escrow account can be very beneficial to the client.

Mortgage PMI is private mortgage insurance. This private mortgage insurance is required by the lender if the borrower owes less than twenty percent of their home. PMI is strictly for the lender to be covered, just in case the borrower defaults on the loan. There are ways to get around PMI, one way is to own more than twenty percent of home and refinance it to get rid of the PMI. Another way not to get PMI is when buying a home put down twenty percent of the purchase price.

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