Origination Fee

• You can expect to pay a loan origination fee, which is usually less than 2 percent of your outstanding principal balance. This fee is charged for the preparation of your mortgage loan.
  
  

Types

• You can also expect to pay appraisal, application, origination, title insurance, title search, credit report, inspection and closing fees.
  
  

Purpose

• The fees are necessary in order for your lender to perform a number of valuable services, ensuring that the lender is prepared for any legal issues that may surface later on. Services such as title insurance, title search and appraisals make sure everything is legitimate.
  
  

Warning

• Some of the fees will not be charged if the loan does not go through and some will. Usually you have to pay the application fee even if the loan is denied or you change your mind about refinancing.
  
  

Time Frame

• When you refinance, make sure you remain in your home long enough to recover your fees. If your payment is reduced by $100 and your total fees are $3,000, it will take you 30 months to recover your fees ($3,000/$100 = 30). To calculate this time frame, divide your total fees by the difference between your old and new payment (assuming it has been reduced).