If you’re considering a refinance home loan, you’re probably shopping rates and looking for a great deal. Desperate situations aside, homeowner should only refinance home loans if it will save money in the long run on interest payments. Refinancing costs money, after all, and it’s not something you want to pay for unnecessarily.
If you’ve done all the research and determined that a refinance home loan can save you money, make sure you save on closing costs as much as possible. Above all, avoid having your closing costs “folded in” to your loan, or added onto it, in other words. You will end up paying interest on those closing costs – in theory, over the entire life of your loan!
There’s another good reason to avoid having closing costs added on to your refinance home loan. If you don’t have to pay for them upfront, you’re less likely to shop around for the cheapest loan, or try to negotiate lower fees. By folding in closing costs, you’re almost certain to end up paying more than you have to in over-priced fees. This is on top of the interest you’ll then be paying for years to come.