Understanding Closing Costs on a Refi

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Understanding Closing Costs on a Refi

Jay C.
Investor · Fort Worth, TX · Member since 2015 · 35 posts · 7 votes

Hi all,

I'm looking to refinance and I just want to understand the Closing Costs and Cash to Close details. The estimate of the Closing Costs and Cash to Close are wildly different in the Closing Disclosure that I'm looking at.

Questions:

1) Cash to Close was $871 in the loan estimate, but it's now $5,808 in the Closing Disclosure. The lender stated that this is due to the Total Closing Costs (J) jumping from $7,771 to $10,309.99.

When I look at the D+I it was $2,434.60 + $8,394.80.

The F. Prepaids has a property taxes of 6 mos = $1,1516.84, but the G. Initial Escrow Payment at Closing also has a Property Taxes at $432.52 per month for 12 mos (total = $5,190.24)

This doesn't seem right.

2) Is it common for the Closing Costs mount $10,309.99 to be rolled into the total loan? I wasn't looking to increase my loan.

I know there was an article or post that someone made with detailed answers on this, but I can't find it for the life of me!

Thanks

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Jonathan StyerBusiness Member
Real Estate Broker · Columbus, OH · Member since 2018 · 330 posts · 396 votes
6y

@Jay C. I would strongly suggest you speak with your lender if you have any questions or are uncomfortable. If you’re working with a Realtor they should be able to help you with what is normal in your market. Best of luck!

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  • Mark H. Porter
    Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
    6y

    Wow...I’m doing mine, keeping it with the same bank, for $300 fee plus appraisal charge.

    0Reply
  • Daniel Goerner
    Rental Property Investor · NY · Member since 2020 · 9 posts · 2 votes
    6y

    It is very dependent on the loan, home, taxes and fees that the lender generally uses. There is no set ratio for how much your closing costs will be.

    I work on loans, and I have seen the numbers jump due to late payments, hidden fees, taxes due and potential liens against the property.

    1Reply
  • Jonathan StyerBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2018 · 330 posts · 396 votes
    6y

    @Jay C. I would strongly suggest you speak with your lender if you have any questions or are uncomfortable. If you’re working with a Realtor they should be able to help you with what is normal in your market. Best of luck!

    Styer Real Estate Professionals4.941 Reviews
    WebsiteView Page
    1Reply
  • Jay C.
    OP
    Investor · Fort Worth, TX · Member since 2015 · 35 posts · 7 votes
    5y
    Originally posted by @Daniel Goerner:

    It is very dependent on the loan, home, taxes and fees that the lender generally uses. There is no set ratio for how much your closing costs will be.

    I work on loans, and I have seen the numbers jump due to late payments, hidden fees, taxes due and potential liens against the property.

    HI Daniel,

    My loan is currently at $206K and with this Refi, it would bring it up to $213K. Not too keen on the loan change. The county tax is $5,200

    Does this sounds normal?

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    5y

    @Jay C.

    You are doing a refinance only to pull out $6,000?($213,000 - 207,000)

    Is your rate going down significantly?

    One item that seems off from the closing statement is it seems you are escrowing in 12 months of property taxes, i normally see 2-3 months of escrow taken at closing.
    "initial Escrow Payment at Closing also has a Property Taxes at $432.52 per month for 12 mos (total = $5,190.24)"

    [email protected]917-280-8544
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  • Jay C.
    OP
    Investor · Fort Worth, TX · Member since 2015 · 35 posts · 7 votes
    5y
    Originally posted by @Basit Siddiqi:

    @Jay C.

    You are doing a refinance only to pull out $6,000?($213,000 - 207,000)

    Is your rate going down significantly?

    One item that seems off from the closing statement is it seems you are escrowing in 12 months of property taxes, i normally see 2-3 months of escrow taken at closing.
    "initial Escrow Payment at Closing also has a Property Taxes at $432.52 per month for 12 mos (total = $5,190.24)"

    Hi Basit,

    My goal is to lower my rate (from 3.25% to 2.875%) and monthly mortgage so I can cash flow when I eventually make it a rental (Currently living here). 

    I asked about the escrowing as well and they said that it should be shortened, but that it will be reflected in the final docs....which I thought these were, that's why I needed to sign them before closing in person.

    I appreciate the help all, I want to triple check these things as I'm working a W2 job, also just did a HELOC on my rentail property and might be missing the details.

    0Reply
  • Jay C.
    OP
    Investor · Fort Worth, TX · Member since 2015 · 35 posts · 7 votes
    5y
    Originally posted by @Basit Siddiqi:

    @Jay C.

    You are doing a refinance only to pull out $6,000?($213,000 - 207,000)

    Is your rate going down significantly?

    One item that seems off from the closing statement is it seems you are escrowing in 12 months of property taxes, i normally see 2-3 months of escrow taken at closing.
    "initial Escrow Payment at Closing also has a Property Taxes at $432.52 per month for 12 mos (total = $5,190.24)"

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    5y
    Originally posted by @Jay C.:
    Originally posted by @Basit Siddiqi:

    @Jay C.

    You are doing a refinance only to pull out $6,000?($213,000 - 207,000)

    Is your rate going down significantly?

    One item that seems off from the closing statement is it seems you are escrowing in 12 months of property taxes, i normally see 2-3 months of escrow taken at closing.
    "initial Escrow Payment at Closing also has a Property Taxes at $432.52 per month for 12 mos (total = $5,190.24)"

    When was the last time you paid for home owners insurance and taxes?
    Was it 12 months ago?

    If that is the case - the closing document is just making sure that those are paid.

    I guess the question is, are you refinancing with the same bank?
    Hasn't your company been collecting escrow for real estate taxes and home owners insurance for the past 10-11 months?
    That should be an offset for the costs you need to pay for closing.

    Also - I wouldn't really consider real estate taxes and home owners insurance really a "closing cost" because those have to be paid regardless whether you refinance or not. I just would want to make sure you are not double paying it.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
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  • Jay C.
    OP
    Investor · Fort Worth, TX · Member since 2015 · 35 posts · 7 votes
    5y
    Originally posted by @Basit Siddiqi:
    Originally posted by @Jay C.:
    Originally posted by @Basit Siddiqi:

    @Jay C.

    You are doing a refinance only to pull out $6,000?($213,000 - 207,000)

    Is your rate going down significantly?

    One item that seems off from the closing statement is it seems you are escrowing in 12 months of property taxes, i normally see 2-3 months of escrow taken at closing.
    "initial Escrow Payment at Closing also has a Property Taxes at $432.52 per month for 12 mos (total = $5,190.24)"

    When was the last time you paid for home owners insurance and taxes?
    Was it 12 months ago?

    If that is the case - the closing document is just making sure that those are paid.

    I guess the question is, are you refinancing with the same bank?
    Hasn't your company been collecting escrow for real estate taxes and home owners insurance for the past 10-11 months?
    That should be an offset for the costs you need to pay for closing.

    Also - I wouldn't really consider real estate taxes and home owners insurance really a "closing cost" because those have to be paid regardless whether you refinance or not. I just would want to make sure you are not double paying it.

    I'm refinancing with another bank. I've paid all the property taxes up-to-date as well as the home owners insurance. I agree, I'm looking at it and it looks like there are some overlapping areas.

    Would the Real Estate Taxes which are in the F. Prepaids and G. Initial Escrow Payment at Closing affect the J. Total Closing Costs?

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