With so many homeowners refinancing, it is tempting to jump on 
the bandwagon and do the same. Especially with the low interest 
rates and appealing offers that are popping up all over the 
place. While refinancing is a wise choice in many situations, 
it is important to note that it is not without costs of its own. 
Some refinance companies charge an application fee just to begin 
the application and refinance process. This is an upfront cost 
that is never rolled into the new loan amount and must come out 
of your own personal funds. There are lenders who do not charge 
application fees, and some lenders who do charge application 
fees often run promotions where that fee is waived. You might 
remember that when you bought your home and took out your 
mortgage, there were costs involved and fees that you paid 
related to that mortgage. When you refinance, those same fees 
and costs must be paid all over again, even though they can 
sometimes be rolled into the new mortgage. If you think that 
you aren’t paying for things like settlement costs and points, 
think again. Even if you don’t have to bring cash to closing, 
the lender has probably added these costs into the term of your 
loan. Be sure you check to see exactly how much they are 
charging you and how much money for these expenses is being 
rolled into your new mortgage balance. To have a lower monthly 
payment, you’re going to wind up paying more points, and to pay 
lower points you’re going to need to pay a higher monthly 
payment. Another cost that you have to consider when you are 
thinking about refinancing is whether or not you have an early 
payoff penalty on the mortgage that you are currently carrying. 
Sometimes these fees can be steep, and at times makes it 
senseless to refinance if the fees exceed the amount you will 
be saving by refinancing in the first place. While there are 
costs involved with refinancing, in the majority of cases, it 
still pays off in the long run. Refinancing can save a homeowner 
tens of thousands of dollars. A rather large sum compared to the 
amount spent on refinancing.