Refinancing Your Mortgage and Cost Savings
Mortgage interest rates are still at all-time lows, and so a lot of people who refinanced a few years ago are doing it again. One question that comes up a lot is: “Because I refinanced not too long ago, is there anything I can save money on this time around?”
The simple answer is “yes.” The first thing that should be reduced is the cost of the title search. Last time, a full search was necessary, going back way before you became the owner. Now that you’re refinancing again, all that needs to be searched is the period of time between the date you became the owner and the date of settlement.
The second thing you can save money on is title insurance. When you refinance, you won’t need to get owner’s title insurance again. Instead, all that’s required is lender’s title insurance. Assuming the amount you’re borrowing is not greater than the amount you borrowed last time, you will save 40% off the cost of title insurance. If your new loan amount is higher than your old loan amount, then you save 40% on what the premium would be for the same amount, and then you pay regular rates for the excess.
Here’s an example. Let’s say that the premium for lender’s title insurance for a $300,000 loan is $650. If you borrowed $300,000 or less last time, you would save 40%. Instead of paying $650, the cost would be $390. However, if you borrowed $300,000 last time and you’re borrowing $375,000 this time, you would pay the discounted rate on the first $300,000, or $390, and you would pay the full rate for the difference between $300,000 and $375,000.
