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    The Refinancing Process
   
     
Why Refinance?
Handling Closing Costs
All About Rates, Points and APR
Loan Choices
The Refinance Process
Closing the Loan
   
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Payment for an opinion or estimate of the value of a property. A report is prepared by a professional appraiser to explain the determination of the fair market value. This fee is often paid for at the time of application for a home loan.
Covers the cost of the credit report used to help determine your creditworthiness. These reports are obtained from credit agencies and evaluate your capacity to pay debts or history of paying debts. This fee is often paid for at the time of application for a home loan.
Payment for an insurance policy that protects the lender against loss should you fail to make payments. This type of insurance is typically required on loans with less than a 20% down payment. These costs may be paid upfront, included in your monthly payment, or included in your interest rate.
Fee covering the cost of having a tax service agency monitor the payment of your property taxes. If you elect to pay taxes yourself, the agency monitors the tax rolls for the life of the loan and informs the lender if the taxes ever become delinquent so the lender can take action to protect its lien position.
Covers the Federal Emergency Management Agency's (FEMA) review to determine if a home is located in a flood zone and if flood insurance is required.
Pays for the services of the closing or escrow agent, or the attorney that handles all the financial transfers and payments associated with the closing of your refinance loan.
Pays for a written history of the title transactions involving the parcel of land where a home is located, including everything recorded in the public record. The search checks for liens, unpaid claims, restrictions or other problems.
Pays for title insurance that protects you and the lender in case of an unresolved claim affecting the marketable title to the property. There are two policies issued, an owner's policy for you and a lender's policy for the lender. Special title binders and endorsements may also be included in this charge.
Some states have taxes related to the real estate transaction. These taxes range from a few dollars to 1¾ percent of the loan amount depending on the jurisdiction. Current states charging mortgage tax include Alabama, Florida, Georgia, Hawaii, Kansas, Maryland, Minnesota, New York, Oklahoma, Tennessee and Virginia.
Recording fees and transfer taxes are charged by most states and localities for recording the purchase documents and any liens in the public record and transferring ownership of the property.
Covers the cost of having a licensed notary public certify the signing of your closing documents and signature.
A fee for the certification of the location of the property, its dimensions, its boundaries, its contour, and the location and dimensions of any improvements. In some cases, the lender can use the original survey done for the purchase of the property.

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When you refinance, you pay both the accrued interest on your existing loan and the pre-paid interest on your new loan for the current month. This is because the last loan payment you made was for the previous month, not the current month (loan payments are always for the month just finished, not the month ahead.) For example, if you close on May 21, you need to pay the accrued interest from May 1-21 , plus pre-pay the interest from May 22-31. (Unlike loans to purchase, refinance loans almost always require you to pay 30 days interest at closing.)
Escrow or "impound" accounts (also called reserves) are required if your lender will be paying your homeowner's insurance and property taxes. Your lender sets up the escrow account by collecting 2 to 4 months worth of the annual cost of your homeowner's insurance and 2 to 4 months worth of your yearly property taxes and any other items covered by your escrow account. At closing, you'll be required to pay these amounts to fund the account. Bank of America customers who are refinancing can roll over their current escrow account into their new escrow account. New customers to Bank of America will get a refund of their existing account from their previous lender.
Property taxes for real estate must be paid quarterly, semi-annually, or annually to the local government. This varies by state. Most people have their lender pay their property taxes through an escrow account.
A form of insurance policy required to protect against certain risks, such as fires or storms. A regular payment for this insurance can be included in your monthly home loan payment through an escrow or impound account.

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