How Much Are Legal Fees to Remortgage?
Navigate remortgage legal fees with clarity. Understand the components of your costs, how they're set, and the typical payment schedule.
In the United States, adjusting a home loan is known as a mortgage refinance. Refinancing involves replacing an existing mortgage with a new one, typically on the same property, to achieve more favorable terms or access accumulated home equity. This process includes various legal fees.
What Legal Fees Cover
Legal fees, often called attorney fees or part of closing costs, cover professional services in a mortgage refinance. These services are essential to ensure the new loan adheres to all applicable laws and properly secures the lender’s interest. Professionals conduct thorough property title checks, ensuring there are no undisclosed liens or claims against the property that could affect the new mortgage.
Legal experts also review the new mortgage offer and its intricate terms, comparing them against the previous loan to identify any discrepancies or unfavorable clauses. They are responsible for drafting and reviewing all necessary closing documentation, including the new mortgage deed, ensuring accuracy and legal validity. Furthermore, these professionals liaise with the new lender, coordinate the payoff of the original mortgage, and manage the official registration of the new mortgage with the appropriate local government recording offices.
How Professional Fees Are Determined
Attorney fees for a mortgage refinance are influenced by several factors. Attorney fees typically range from $500 to $1,000 for a standard refinance, though this can fluctuate. The complexity of the transaction, such as dealing with multiple liens or unique property arrangements, can impact the final cost.
The loan amount also plays a role, as some firms may structure their fees as a small percentage of the total loan, while others might charge a flat fee. Geographic location is another determinant, with legal costs varying significantly across different regions. Homeowners may encounter different fee structures depending on the type of legal firm chosen, whether it is a larger practice or a smaller, local office.
Understanding Disbursements
Disbursements represent additional costs incurred during the mortgage refinance process that are paid to third parties, rather than being part of the attorney’s professional fee. These expenses are essential for completing the transaction and are typically passed directly to the homeowner. For example, recording fees are charged by local government entities to officially register the new mortgage deed in public records, ensuring legal recognition of the new lien. These fees can range from $25 to $250, with an average around $125, but vary by county and document volume.
Property search fees, often bundled with title insurance, are incurred to verify the property’s ownership history and identify any encumbrances; these can range from $300 to over $2,000. An appraisal fee, usually between $300 and $1,000, covers the cost of independently valuing the property to assure the lender of its collateral value. Credit report fees, typically $10 to $100, are also common disbursements, covering the cost of assessing the borrower’s creditworthiness.
The Legal Process and Payment Schedule
The mortgage refinance process follows a structured sequence, starting with the homeowner’s application and culminating in the finalization of the new loan. Upon application, lenders provide a Loan Estimate, which details the estimated professional fees, disbursements, and other closing costs associated with the refinance. These total closing costs typically range from 2% to 6% of the loan amount, meaning a $200,000 refinance could incur between $4,000 and $12,000 in total costs.
While some minor disbursements, like application or appraisal fees, may be required upfront, the majority of legal fees and remaining disbursements are paid at or just before the closing. Homeowners receive a Closing Disclosure at least three business days before the scheduled closing date, providing a final, itemized list of all expenses. At closing, funds for these costs are typically transferred via wire or cashier’s check. The entire refinance process, from application to closing, generally takes between 30 to 45 days.