Closing costs accrued during a home mortgage refinance can be displayed in a higher or lower interest rate and can be added to the principal to be repaid on the loan or can be required to be paid in cash at closing. Typical costs that are associated with closing are prepaid interest points, loan document fees, loan origination fees, title search, property inspection and property appraisals. Whether these are paid directly, or are rolled into the cost of the loan, they must be paid and must be considered as a cost of money.
An option ARM is a fairly new type of refinancing on the market and is more common with new home loans than with refinances. Choosing this type of mortgage loan, means that you are beginning the loan with payments that are less than the necessary cost to cover the home mortgage rates interest and principal costs. The difference between the payment amount and the total cost of the monthly payment is simply added to the principal balance and interest is charged against the revised amount. For a person with a flexible income this can be a great choice, but it requires self discipline to make additional payments when the income level is higher.