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What are the Costs Involved in Refinancing a Mortgage?

It is crucial to understand the associated fees before opting to refinance your mortgage. Aside from the previously stated prepayment penalties, refinancing a mortgage also carries a number of additional costs. Legal fees, home appraisal fees, mortgage registration fees, mortgage discharge fees, and other costs are a few of these expenses. Certain fees cannot be avoided, but there are some that you might be able to avoid.

  • Penalties for early mortgage payback

You will probably be charged a prepayment penalty if you decide to refinance your mortgage before the end of the term. If this is you, the prepayment penalty is probably going to be the biggest expense you pay.

The terms of your mortgage will determine how much of a penalty you will pay. For instance, the financial penalties for breaking an open or variable rate mortgage are usually less severe than those for breaching a closed fixed rate mortgage. 

Another factor will be the amount of your mortgage and how far along you are in the term. In general, you should budget at least a few thousand dollars for your prepayment penalty. But in certain situations, it can reach tens of thousands of dollars. Fortunately, you can avoid mortgage prepayment penalties by refinancing at the conclusion of your current mortgage term.

  • Legal fees

You will need to engage a real estate attorney to go over the required documentation in order to refinance your mortgage. Since hiring a lawyer can get expensive, budget about $1,000 for this.

  • Fees for home appraisals

A house appraisal will probably be required by your mortgage lender if you decide to refinance. Why? To determine how much you can refinance your mortgage for, your lender must have up-to-date information about the worth of your house. Hiring a house appraiser can be expensive, but it often saves several hundred dollars.

  • Registration fee for mortgages

The mortgage registration fee is the next expense you should plan for. You are taking out a new mortgage when you refinance, so you will have to pay to have it recorded. Province-specific mortgage registration fees apply. 

  • Discharge fee for mortgages

Last but not least, a mortgage discharge fee must be paid by everyone who wants to refinance their mortgage. This cost is only incurred when you move lenders for your mortgage. You won’t be charged this fee if you refinance your mortgage with the same lender. Depending on where you live, mortgage discharge fees normally range from $200 to $350.

So, these were some common costs involved with refinancing mortgage in Abbotsford that you must be aware of before planning to refinance. If you are looking for a reliable mortgage broker who can help you with home mortgage refinance in Abbotsford, rely on none other than Sandhu & Sran Mortgages.