Loan Origination Fees

• Loan origination fees are fees you pay to cover the lender's cost of creating and processing a loan. They are often referred to as points. One point is equal to 1 percent of the mortgage. So a loan origination fee would be $1,500 on a $150,000 loan. You can lower your interest rate by paying more points. With government loans, any additional points are called discount points.
  
  

Appraisal

• Frequently, since home values change, a bank handling a refinance will want to do an appraisal of the property. They have to pay an appraisal company to inspect your property, assess any additions or detractions since the original loan was made, and compare your home with other properties in the area with similar attributes. Appraisal fees may be a few hundred dollars, but they vary. More unique homes tend to cost more because it is difficult to find comparable properties. FHA and VHA appraisals are also more than conventional appraisals because there are additional government requirements.
  
  

Other Fees

• Some fees may or may not be charged and depend on the lender. Document preparation fees often run around $200. Document preparation used to be done by special companies but is now often done in house. Underwriting fees pay for the underwriter who makes sure the loan meets guidelines and may review the borrower's financial situation, among other things. Underwriting costs vary but are usually in the neighborhood of $300.
  
  

Interest and Reconveyance

• There are charges associated with starting a new loan on a property you already own. These include outstanding interest because there is often interest due since interest is paid in arrears. The lender may add this interest to your closing costs. Another cost is reconveyance by which your first lender "reconveys" the property back to you showing that the old loan is paid. This is done by a "recording of reconveyance" at the county recorder's office. The charge is usually between $75 and $125.
  
  

Notary and Demand Fees

• Notary fees must be paid to a notary public to notarize documents. This generally costs about $40. Demand fees are paid to your first lender for the cost of closing out the loan which may cost about $60.