Who ya gonna call? The Mark Smith Team!
It may be Spooky Season, but buying or refinancing doesn’t have to be scary. As you walk through the loan process, we’ll be there every step of the way, working hard to get you the supernatural savings you deserve!
Are you spooked by closing costs and fees? You’re not alone. In a recent survey, 27% of homeowners said they were putting off refinancing because they believed the costs and fees were too high. It’s true that there are costs involved with a refi, but keep in mind that what you pay now will be easily recovered in the future. Here’s how it works…
3 Categories of Closing Costs
Lender Fees: Direct lender fees are for the LENDER’S services. The Mark Smith Team believes in full transparency, so we only charge you for real costs, like our processing and underwriting fees. Beware: some lenders aren’t so clear and charge made-up fees, like administration, loan commitment, loan funding, etc… Indirect lender fees are collected by the lender to pay for THIRD-PARTY services. For example, the Appraisal, Credit Report, Flood Certification, Tax Services, and Loan Legal Document Preparation fees.
Third-Party Fees: These are charged by third parties for the loan for the services they provide, and the costs are established based on the market. Like indirect lender fees, these are pretty much set and unavoidable expenses. The title company has to close and insure the loan, which adds closing and title insurance fees. The county has to record the documents, so you’ll have a recording or e-recording fee. There may also be a third-party cost for a survey. Just plan for these expenses as part of the process!
Prepaid/Escrow Fees: These aren’t technically “closing costs” but they will be collected at closing. Prepaid fees are regular homeownership costs whose payment is being managed through the loan process. For example, if you paid cash for your home, you’d still have to pay property taxes and insurance when you close. On a refinance, most of this money is either already saved by the homeowner OR sitting in an existing escrow account that will be refunded… So, they’re not “closing costs” but be prepared for them.
The Pay-Off
With all those fees, is it worth it? Yes! The savings will be scary good. Right away, you’ll pay less each month, thanks to your lower rate, and savings will pile up in the long run when you’re paying less and gaining equity. When you hit the sweet spot of owning a paid-for property with increasing value, your wealth will truly take off. You may even chuckle thinking back at the closing costs that almost prevented you from buying or refinancing.
Are you afraid to think that far ahead? Don’t be! This kind of long-term thinking fuels Mark! He wants you to dream a big dream, so he can help you reach it. It’s important to think long-term with real estate investments. Of course, there are financial costs you need to be prepared for, but if you can pay the fees today, real estate will be a significant part of your wealth-building plan later in life.