What are the penalties for getting your house refinanced?

Amal
I was told that you lose equity. Is that a known fact?

Clint
Every time you refinance your home you are using the equity.i wouldn't say you lose it.if you refi and do improvements to your home you are actually putting that equity back into your home.if you have equity in your home and you refi, yes you are using the equity and if you sell at some point then it is less cash for you.unless you have improved your home/property.

Cecile
There are no penalties for getting your house refinanced. So le's get that fact straight now.It depends on why you refinance your house as to if you will lose equity or not. If you do a rate and term refinance on your property. This means you take no money out of the property, you just want to lower your interest rate and perhaps the terms of your mortgage also, you don't necessarily lose equity at all.Now if you refinance your house to cash out for any reason you are trading equity for money to pay off credit cards, purchase a big ticket item like a car, appliances and stuff that you don't want to make monthly payments on.Also if you want to remodel your house and you want to pay for it by refinancing your house you would be trading your equity for the money to pay for the remodeling or room addition or perhaps a new kitchen or bathroom.Now if you are talking about the fees and points charged for refinancing your house, these will always be there. Normally you are charged a #1. Points this is one percent of the refinance amount. This normally go to the broker that isdoing your loan for you. Sometimes your mortgage broker might charge a processing fee or other by this is less than .5% of the loan amount.2. Fees are charged by A. The title company for survey and insuring your house, B. Escrow closing fees for making sure all goes well and the paperwork is done properly. In some states an attorney is required to do this. In California we use escrows and keep the attorneys doing what they do best.C. Appraisal fee for the person that does the appraisal in other words determining the value of your house. I know that you might have a question. I hear that they advertise on the radio and TV that there are no points and no fee loans. Ask yourself this question, Would you work all day for free? Well your mortgage broker and any other lender is not either. You pay for these no fee no point loans one way or the other. One way is to raise the interest rate over the life of the loan. So when someone tell you don't worry we will take care of the loan for you it is a no points no fee loan. Ask "Who is paying for the loan and does it raise my interest in any way.Most of the fees and points you pay for refinance or purchase of a home are tax deductable. If you do not pay them you can not get it back. Ask your cpa or tax advisor concerning your taxes.I hope this has been of some use to you, good luck."FIGHT ON"

Celia
You may have a pre-payment penalty required if you refinance, only way to know is to review your own loan closing documents, check the NOTE and MORTGAGE to see if there's any pre-payment penalty riders or if the prepayment penalty is written directly into the NOTE.Beyond that, in most cases you will pay the closing costs by financing them with a higher loan amount, thereby using (or losing) your equity in the process.You can avoid that by taking a "no-cost" refinance option, where you take a higher rate and let the lender pay the closing costs from the extra yield they earn by selling the higher rate.Either way, there's always closing costs in a mortgage transaction, between lender, title company and state tax/recording costs. And ultimately YOU will always be the one paying them, the only question is how. Through higher loan amount or higher rate. The higher rate option makes sense if you won't be in the house or the new loan longer than 5-7 years, depending on your offers.

Janelle
not always, only if there are charges and fees added to your loan. Depending on your situation, you may be able to get refinanced for zero fees, leaving your equity 100% intact. Try www.WestCoastHomeMortgage.com