Mortgage refinancing fees
tl;dr: I think you can find a much better deal. Doing a strait refi will cost you some amount of money.  However, a 2.5% fee ont top of closing costs seems really high.  You can get a quote from Quicken loans pretty quick and compare their fee.  Also I would check with a local bank, preferably one you already do business with.  The 2.5% is probably their commission for originating the loan.  If you are in the Southeast I have had great luck with Regions bank.  They are large enough, but also small enough.  Please know that I have no affiliation with either company. BTW the rate also seems high.  Doing a quick search of Bank Rate, it seems you can get 3.25% with zero fee as of this writing.  The worse deal they show is 3.46 with a .75% fee, much better than you were quoted. If you can afford it I would also encourage you to think outside the box.  A client of mine was able to obtain a Home Equity Loan (not line of credit) to replace their mortgage.  They went for a 7 year pay off, with the loan in first position, at a rate about .75 below the then current 15 year rate.  The key was there was zero closing costs.  It saved them quite a bit of money. Also look at a 10 year fixed.  It might not be much more than you are paying now. "tl;dr: I agree with Pete B.'s assertion that you should continue shopping. That's not the whole story though; there are other factors that can raise your rate, and affect your closing costs. The published rate is typically the best rate you can get. Here are some other factors that can raise your rate: You should have received a loan estimate which will itemize the fees you will pay. On that document you will see if you are paying a price to ""buy down"" the rate, and all the other fees. How are you calculating the 2.5%? Note that some fees are fixed. An appraisal on a $40K home may cost the same as an appraisal for a $400K home. If you add up the total closing costs and view it as a percentage of the loan, the smaller loan may have a higher percentage than the larger loan, even though the total cost of the smaller loan is less." "2.5%? Whoa, you are being robbed there.  Straight-up, stripped-down, and bent-over-a-table robbed. Never agree to ""fees"".  If they don't want to do the work to give you a loan, there are other lenders who do. Rarely agree to ""points"".  If you know -- and I don't mean ""think"", I mean ""know"" -- if you know that you are going to hold that loan much longer than it would take to repay those points, then maybe.  For example, if they are charging one point to lower your rate 0.25%, you want to be totally sure you will stay in the house at least four years, and probably more like six or eight years before moving or refinancing. It's more-or-less OK to pay for the appraisal.  If something goes wrong with the loan application, the appraisal will be valid for a few more months, you can try again. I once had 14% cash for a down-payment.  The loan officer said if I could come up with 15%, the rate would be reduced by 0.25%.  To get the money, I took a ""reverse point"", which paid me 1% but raised my the rate by 0.25%. The loan officer, who wasn't too bright, asked, ""Why did you do that?  The two things cancel each other out."" ""I did it,"" I explained, ""because you paid me 1% of the value of my house to sign my name twice."""
Make sure you shop around and ask a lot of places for a good faith estimate.  Last I knew, the good faith document is the same everywhere and long form that makes it easy enough to compare the hard numbers from place to place.  I have gotten several estimates for various scenarios and I have had them hand written and printed.  (I discounted the hand written ones because that broker seemed pretty disorganized in general) Learn the terms online, and start comparing.  Use the good faiths as a negotiation tool to get lower rates or lower costs from other brokers.  See how accurate the person is at listening to you and filling out the paperwork.  See how responsive they are to you when you call with questions and want some changes. Check with at least four places. The more places you shop, the better idea you will have of what fees are high and what interest rates are low.  I might pay a higher fee to get a lower interest rate, so there are lots of trade offs to consider. I’d say No, it’s not crazy. I did that even for a mortgage, because the bank tended to lose my checks or let them sit for some days, and then claim I paid late. They were known on the internet for their poor processing department, so I decided to avoid that monthly hassle with calling and arguing, and refinanced. Compare the pain with the cost for refinancing, and if you think it’s worth it, change. You might even get a cheaper credit, and save on it. A home equity loan (not a HELOC home equity line of credit) typically comes with far lower fees, but a slightly higher rate.  As rates fell over the last decade, I saw a choice of the Equity Loan with no cost at all, or a refinance with a few thousand in closing costs. We refinanced 3 times with the home equity loan, the last one was 5%. As the 15 year regular mortgage hit 3.5%, it seemed worth the costs, about $1800, to get the low rate, and expecting that rates would go lower. The 1.5% savings on the balance put our breakeven at fewer than 6 months.  If you truly meant HELOC, the variable aspect is the risk, as rates how little room down from here, but much room to rise. "The usual rule of thumb is that you should start considering refinance when you can lower the effective interest rate by 1% or more. If you're now paying 4.7% this would mean you should be looking for loans at 3.7% or better to find something that's really worth considering. One exception is if the bank is willing to do an ""in-place refinance"", with no closing costs and no points. Sometimes banks will offer this as a way of retaining customers who would otherwise be tempted to refinance elsewhere. You should still shop around before accepting this kind of offer, to make sure it really is your best option. Most banks offer calculators on their websites that will let you compare your current mortgage to a hypothetical new one. Feed the numbers in, and it can tell you what the difference in payment size will be, how long you need to keep the house before the savings have paid for the closing costs, and what the actual savings will be if you sell the house in any given year (or total savings if you don't sell until after the mortgage is paid off). Remember that In addition to closing costs there are amortization effects. In the early stages of a standard mortgage your money is mostly paying interest; the amount paying down the principal increases over the life of the loan. That's another of the reasons you need to run the calculator; refinancing resets that clock." A better idea if applicable is to borrow 50K (max allowed) to buy a house and pay interest to yourself instead of a bank. And none of that origination and closing fees lost to the lender "If you mortgage after the fact you will usually pay an extra .25% higher on the interest rate because a ""cash out"" refinance is treated as riskier than a new home purchase mortgage. You might save enough on the purchase price of the home with a cash offer to make that higher interest rate worth it, but in most cases, if you are planning to hold the loan for a long time, it's best to get that mortgage at the time of purchase. You might be able to get the same deal with an offer that says you will pay cash if there are any problems getting the loan approved." You have the 2 properties, and even though the value of property B is less than the amount you owe on it hopefully you have some equity in propery A. So if you do have enough equity in property A, why don't you just go to the one lender and get both property A and B refinanced under the same mortgage. This way hopefully the combined equity in both properties would be enough to cover the full amount of the loan, and you have the opportunity to refinance at favourable rate and terms. Sounds like you are in the USA with an interest rate of 3.25%, I am in Australia and my mortgage rates are currently between 6.3% to 6.6%. "This summer I used a loan from my 401(k) to help pay for the down payment of a new house. We planned on selling a Condo a few months later, so we only needed the loan for a short period but wanted to keep monthly payments low since we would be paying two mortgages for a few months. I also felt like the market might take a dip in the future, so I liked the idea of trying to cash out high and buy back low (spoiler alert: this didn't happen). So in July 2017 I withdrew $17,000 from my account (Technically $16,850.00 principal and $150 processing fee) at an effective 4.19% APR (4% rate and then the fee), with 240 scheduled payments of $86.00 (2 per month for 10 years). Over the lifetime of the loan the total finance charge was $3,790, but that money would be paid back into my account. I was happy with the terms, and it helped tide things over until the condo was sold a few months later. But then I decided to change jobs, and ended up having to pay back the loan ~20 weeks after it was issued (using the proceeds from the sale of the condo). During this time the market had done well, so when I paid back the funds the net difference in shares that I now owned (including shares purchased with the interest payments) was $538.25 less than today's value of the original count of shares that were sold to fund the loan. Combined with the $150 fee, the overall ""cost"" of the 20 week loan was about 4.05%. That isn't the interest rate (interest was paid back to my account balance), but the value lost due to the principal having been withdrawn. On paper, my account would be worth that much more if I hadn't withdrawn the money. Now if you extrapolate the current market return into 52 weeks, you can think of that loan having an APR ""cost"" of around 10.5% (Probably not valid for a multi year calculation, but seems accurate for a 12 month projection). Again, that is not interest paid back to the account, but instead the value lost due to the money not being in the account. Sure, the market could take a dip and I may be able to buy the shares back at a reduced cost, but that would require keeping sizable liquid assets around and trying to time the market. It also is not something you can really schedule very well, as the loan took 6 days to fund (not including another week of clarifying questions back/forth before that) and 10 day to repay (from the time I initiated the paperwork to when the check was cashed and shares repurchased). So in my experience, the true cost of the loan greatly depends on how the market does, and if you have the ability to pay back the loan it probably is worth doing so. Especially since you may be forced to do so at any time if you change jobs or your employment is terminated." If you selected a mortgage that allows additional payments to be credited against the principal rather than as early payment of normal installments, them yes, doing so will reduce the actual cost of the loan. You may have to explicitly instruct the bank to use the money this way each time, if prepay is their default assumption. Check with your lender, and/or read the terms of your mortgage, to find out if this is allowed and how to do it. If your mortgage doesn't allow additional payments against the principal, you may want to consider refinancing into a mortgage which does, or into a mortgage with shorter term and higher monthly payments, to obtain the same lower cost (modulo closing costs on the new mortgage; run the numbers.) In the spring of this year FHA increased their rates for Mortgage Protection insurance. (I am looking for a good refernceon the government website) Non Government reference Annual MIP For an FHA Streamline Refinance that replaces a FHA loan endorsed on, or after, June 1, 2009, the annual MIP varies based on loan type and loan-to-value. The annual MIP schedule, for loans with case numbers assigned on, of after, June 1, 2009 : For your example the monthly payment would be: $184,192*(1.2/100)*(1/12) = ~ $184.19  You were quoted 179.57 a month Some types of loans allow for reamortization (recasting) - which does exactly what you're talking about (making a big payment and then refiguring the monthly amount rather than the overall lifespan), without requiring any kind of a fee that refinancing does. Not every, or even most, mortgages, allow for recasting. And most that do offer recasting, may limit the recasting to a once-a-loan type of thing. So check beforehand, and make those big payments before you do any recasting. (Most banks and mortgage servicing companies may not advertise or even speak about recasting options unless you specifically ask your loan officer.) I don't know what rates are available to you now, but yes, if you can refinance your car at a better rate with no hidden fees, you might save some money in interest. However, there are a couple of watchouts: Your original loan was a 6 year loan, and you have 5 years remaining.  If you refinance your car with a new 6 year loan, you will be paying on your car for 7 years total, and you will end up paying more interest even though your interest rate might have gone down.  Make sure that your new loan, in addition to having a lower rate than the old loan, does not have a longer term than what you have remaining on the original loan. Make sure there aren't any hidden fees or closing costs with the new loan.  If there are, you might be paying your interest savings back to the bank in fees. If your goal is to save money in interest, consider paying off your loan early.  Scrape together extra money every month and send it in, making sure that it is applied to the principal of your loan.  This will shorten your loan and save you money on interest, and can be much more significant than refinancing.  After your loan is paid off, continue saving the amount you were spending on your car payment, so you can pay cash for your next car and save even more. The question Why would refinancing my mortgage increase my PMI, even though rates are lower? contains a decent discussion of PMI. It's based on the total amount you borrow, not just the difference to 80% LTV.  For easy math, Say you put 15% down on a $100K house. Your PMI is 1.1%, not on the 'missing' $5000, but on the $85000 balance. So you are paying $935/yr extra due to the $5000 you didn't have available. In addition to the mortgage itself. Even at 90% LTV, you'd pay $990/yr for the fact that you are short $10,000.  Other than this discussion of PMI calculations, Chad's answer is pretty thorough. You should check the details of those balance transfers - they typically have a 3 to 5 % 'one-time fee', which means you pay nearly a year's interest right away. And then every time you transfer the total on again. Also, this fee gets added to the credit card total, and it is possibly considered paid last (after you paid off the completed transferred balance), so it cost interest for the whole time (and that interest is different, maybe 19.99 % or worse). It is probably a better idea to refinance for 5 years at <3%, and they pay off as fast as possible. "You can definitely do it. But: Refinancing would make more sense to you, you can refinance at no cost and get rates below 4%, so you'll be saving 1% a year, without paying anything extra. If you pay the fees you'll get even lower rates, but then you need to check whether its worth it. I've just refinanced to a 15 years fixed mortgage at no cost a couple of months ago, and got 3.875% rate (in California), so its definitely worth looking into, don't just dismiss it. This will limit your flexibility though, because paying 30yrs loan ""as if"" is much more flexible than committing on 15yes loan - you can always go back to your original payments if you want to spread it out a bit more. You can add a HELOC once you've accumulated some equity to back you up, that's what I did."