Refinance-Waive Closing Fees: Is it worth it?
When we say waive the closing cost, we actually mean negotiate the closing cost. Before you decide to refinance your mortgage do some research and, find out how you can save some money on the closing costs.
Closing costs can rocket sky high if you are not careful, so you should make sure that you are only paying what you have too.
When people say, “You can waive your closing cost” it’s like saying, “The bank can give you a loan”. Sure, the bank can give you a loan, but will it?
Types of Fees on your Mortgage Closing
When you prepare to close your mortgage you usually have three types of fees levied onto you. These include:
- Fee charged by the broker or lender
- Fees to be paid to third parties like the person doing the appraisal
- Taxes and, other governmental fees
All three categories may seem like something you cannot get put off, and at times you may not be able to waive the fees. However, you could negotiate the fees down so that if you were supposed to pay $1000 you pay maybe half that amount.
- Broker Fees
The broker is responsible for the process that will include creating your application, document preparation and, other such paper work. It seems reasonable that the broker or lender charge a high fee. However, keep in mind they have no out of pocket cost. You are paying mainly for their time so push to get the best rate possible.
- Associated Service Fees
The broker or lender usually takes care of the appraisal and other such details, you have to reimburse them for the service. However, make sure they are not overcharging you for it. Find out the going rates and, make clear that is what you will be paying.
- Taxes and, Governmental Fees
Taxes and, governmental fees have no wiggle room. However, make sure you are not being charge a service fee on them.
No Cost Closing
In a buyer’s market your creditworthiness still counts. If your credit is way down low, you can’t expect much leeway from anyone, neither the government nor the lender. So you will have to pay most of the associated fees. However, if you have a good credit score, chances are, you will have enough wiggle room to actually pay nothing for the closing.
Most lenders and, brokers have a good idea of the profit they want to make, and you will have a lot of wiggle room. So figure out what you want to pay and, understand how some of the closing fees will change that number.
Good credit score? The mortgage companies and, banks will come to you…
- Many times the bank or mortgage company will waive the fees. No, it’s not always possible, but it has been known to happen.
- They may waive the closing cost, but increase the mortgage rate. So say you have a mortgage rate of 4.5% with closing costs. If you do not want the closing cost they may hike the rate to 4.7% and, waive the closing fees.
Is waiving the no closing cost worth it?
- If you do not have upfront cash waiving the closing fee makes sense by paying a higher mortgage rate. If you have only the 20% down, opt to waive the fees and, hike the mortgage rate. This makes sense only when you want to stay in the home for at least 5 years.
Tip for best deals:
- Talk to as many lenders and, brokers as you can, and see who offers the best deal and, affects your numbers the least.
- Waive the closing cost if you are in the house for the long haul. The higher mortgage rate given when closing cost is waived will be less expensive over a five year span.
- Do your math and, see which solution makes the most sense.