Refinance Fees

by Tanya M
(Woodstock, Georgia USA)

Ask Kate! Refinance fees! Too high? Hi Kate, I am having a problem understanding these refinance fees. Compensation From Rebate $4839 and Credit for Specific Interest Rate Chosen $4839.

Tanya continues... After researching on the web, it sounds like this is just a way for the broker to make cash by giving me a higher interest rate.

I'm also being charged a 1 percent origination fee although my mortgage professional said she would drop it to 1/2 after I called back stating the fees seemed too high.

My payoff is $268,781. My new loan amount will be for $278,800 including all fees. The streamline mortgage will take my current rate of 5.375 down to 4.375 percent.

Is there any way around this? I want to give this company the chance to adjust these fees since we have already started the process. However, I also know I can back out to probably get a better deal but will take more time.

We were trying to close soon. Please give me your input on how to handle this situation.

Thanks you, Tanya

Kate Answers: Refinance Fees! Too High?

Dear Tanya,

I don't know about you but when a company "decides" to lower my fees, it tells me they knew they were charging too much to begin with.

So! Are your refinance fees too high?

Although I have not seen the good faith estimate, based on what you've described, I am suspicious you are being raked over the coals. Sorry, they already lost my trust with the "we'll cut your origination fee in half if you think it's too high" part.

Your Mortgage Should Not Be A Negotiation

Not knowing anything other than what you've told me, I'd say you are being taken advantage of. Getting a mortgage should not be a negotiation. But your mortgage process has obviously been turned into one.

So you are going to need to analyze the good faith estimate from your lender. Since I can't be with you, I've created these pages to walk you through mortgage closing costs and what to expect. On my other website, I have an even more in-depth article on mortgage closing costs.

Yield Spread Premium And Refinance Fees

Next, Compensation From Rebate is also called Yield Spread Premium. As you asked, is the broker giving you a higher interest rate to make $4839 on the sly in addition to a 1 percent origination fee and who know what other costs?

Might be but not necessarily so! The refinance fees, monthly payment and loan amount need to be compared. I have written a guide on yield spread premium to help you recognize what's fair and what isn't.

Yes! It's YOUR Mortgage

But Tanya, the bottom line is this: Do you trust your mortgage professional? If so, sit down and go through each of these points with her. Talk with her about what you've read here and expect answers.

Otherwise, ask your friends who treated them fairly when they refinanced. Remember, this is YOUR mortgage. No one will care more about your refinance than you!

Don't forget to lock in your rate and get it IN WRITING. I have included help for locking mortgage interest rates at the bottom of this page, full of more eye opening advice!

Best Wishes,

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Finding The Help You Need For Locking Rates

My Interest Rate Lock Guarantee - Help for timing your rate lock.

The best solution to avoiding hidden fees is to ask the right questions before you lock mortgage rates.

All about getting mortgage broker fees in writing - Otherwise your rate lock is meaningless!

How good is a mortgage interest rate lock guarantee? In the end, you have to read your lender's paperwork.

Because Yield Spread Premium is a common reason for losing your rate lock, here is the insider scoop on this odd sounding term.

Questions to Ask BEFORE You Lock

Ask Kate about locking - Ask a question and get an answer from Kate.

Search Readers' questions and Kate's answers at Mortgage Rate Lock Center

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