4 Ways to Reduce Michigan Refinancing Closing Costs
Published March 9, 2010 | 
Michigan refinancing costs can seem a bit overwhelming, when you first review them. In fact some people get so scared by the costs, they think they have to pay, that they stop reviewing their options.
This post is going to discuss 3 ways you may reduce the costs when considering Michigan refinancing options.
Michigan Refinancing Cost Reduction Tip #1 – Choose a Higher Rate.
I know it sounds a little strange, and you may have even read that headline a few times, in disbelief, but it is correct. Many people don’t realize the interest rate that you choose affects your closing cost you pay and the costs affect the rate. This is true, not only if you are paying points but even when you are getting a zero point loan, or even a zero cost loan. The new Good Faith Estimate that was recent issued and required, starting January 2010, is an attempt to show this relationship. You will receive this good faith estimate, as part of the Michigan refinancing required disclosure package. So if you see that your Michigan refinancing costs are higher that you’d like, ask your loan originator about a higher rate, to reduce the closing costs.
Michigan Refinancing Cost Reduction Tip #2 – Choose a Different Title Company.
The Good Faith Estimate that you receive with your Michigan refinancing disclosures will likely include a quote from a specific title company, you may shop around and use a different one, assuming the lender approves them.
A word of warning here, you want to be sure that you are choosing a reputable title company, since Michigan refinancing requires that the title company receives the funds from your new lender, and subsequently sends the payoff funds to the lender you are paying off. So in short, the title company handles all of the money, and therefore needs to be a reputable company, preferably with many years in the business.
Michigan Refinancing Cost Reduction Tip #3 – Elect to Not Take Cash at Closing.
If your goals of Michigan refinancing, do not require that you receive cash back, or cash out, at closing, you may be able to further reduce your closing costs, by simply refinancing you balance plus costs only. This is considered a “rate and term” refinance and is also presumed to be less risky, by most lenders, and therefore may allow lower closing costs. Please keep in mind, if you have a loan to value of 65% or less, this tip may not apply, since there’s typically no adjustment for cash out at the lower loan to values.
Michigan Refinancing Cost Reduction Tip #4 – Set up an Escrow Account.
Establishing an escrow account with your new lender, for your property taxes and home insurance payments, will typically reduce your Michigan refinancing closing costs versus waiving your escrow account.
As with many features or options with loans, having an escrow account is typically considered to be less risky for the lender, since they are able to monitor your payments in real time, and the lender will know in advance if you are not paying your property taxes, or insurance.
This concludes my list of “4 ways to reduce Michigan refinancing closing costs” if you have any additional suggestions, please feel free to comment below.
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