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Closing costs on a refinance

I'm looking to refinance and get some money back to spend on updates to my house. I owe about $53,000 and estimate that the house is worth $90,000.  My credit rating is excellent and I am hoping to get $10,000 back on the refi. My first quote looks reasonable with a rate at 5.25% and no points, but the closing cost is estimated at around $3500.  This seems high to me. Can anyone tell me what a reasonable closing cost should be for this type of loan? 
  • March 19 2009 - Sapulpa
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Answers (5)

Smaller loan sizes are tough for lenders because it is the same amount of work for 60,000 loan as it is for 360,000 loan.  So many of the fixed expenses will be the same and the overall costs can seem high in comparision for a small loan.

You might want to consider a local bank or credit union for a Home Equity Line of Credit.  These can often be obtained for ZERO cost and this might work better in the long run for your scenario.

  • March 19 2009
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I concur, that is good advice from Justin, a Home Equity Line of Credit from a local bank or credit union may be your best option.  Although the interest rate on HELOC's are variable, the rates are very low right now.  You may even be able to get a HELOAN which is a fixed rate home equity loan.  Good Luck!
  • March 19 2009
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It sounds fair. Keep in ind it's a small loan amount the broker has to charge you points.

  • March 21 2009
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1)Not sure what your current mortgage is at, but it may make sense to see if you can get a home equity line of credit from your local bank.

2) $3500 total closing cost at 5.25% no points at under 70k doesn't sound bad at all. Also, if you currently escrow your taxes and insurance and your new mortgage is doing the same, you should get a refund check a few weeks after you close...that should be a wash.
  • March 22 2009
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Thank you all for the input. 
I am going to look into getting a home equity loan.  It doesn't seem to make sense to add an additional $3500 in debt just to get home improvement money when I hope to be able to move in 3 years or less. The only downfall of the the home equity loan for me is it will increase my monthly cost over a refinance, but I think it will be worth it in order not to incur the extra unnecessary debt. 
  • March 22 2009
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