Refinancing should not cost more than any other mortgage. Closing costs here average about 1800 or so with a purchase. Refinancing is typically a little less, but not much.

Chris, make sure the broker's fees are disclosed up front in a good faith estimate so your friend can make an apples-to-apples comparison.

Just my recent experience: I was helping my brother navigate the buying process recently and he wanted to use a broker his friend recommended. Several weeks into the process, the guy finally sent over his GFE. I nearly plotzed. There were about $7000 in fees (about half was origination) and the rest were totally padding.

Maybe this Web site would help?

Here is a link that might be useful: Jack Guttentag's Mortgage Professor

I apologize if this seems rude...but, if you have to ask these questions should you be presenting yourself to your relative as qualified to "review" his documents? Perhaps, your relative should have someone who knows what to look for perform this function?

Tricia

Tricia is dead-on!

Here's the critical question;
How important is the PROPER loan structure, as it fits to your relatives overall family finances... in addition to the nominal interest rate & fees?

Remember, the cheapest rate on the wrong financing structure can cost you thousands and thousands, and/or push retirement off for years further than it needs to be.

If your relative (and you) don't personally have a family relationship with a quality, 'big picture' financial planning loan officer... then THROW ON THE BRAKES RIGHT NOW!!!

Since this is merely a refi, TAKE YOUR TIME... this is of financial importance equal to the health importance of having a great family doctor. Shop your professionals... not merely one or two of the financial variables (like fees and rates.) There is SO MUCH MORE INVOLVED... playing it blind can cost you so, so much more.

Luck!
Dave Donhoff
Strategic Equity & Mortgage Planner

Red flag to me is "coming to the house". After my mother's death, I found paperwork of a home improvement loan (2nd mortgage). This turned out to be a predatory loan. The salesman (also a notary) was extremely good at winning her confidence and they really pulled at fast one. She, at the time, didn't share the details of this loan 'scam', but during the estate settling, there were some major headaches to deal with. They had had her quit claim her home out of the family trust, then talked her into not one loan, but a second loan -- all with exorbitant fees. There was even a bogus lien on the house which had to be dealt with.
After this, my mother's name must have been sold to a "sucker's list" because there were so many phone calls. But luckily, there were no more major scams that I was aware of.
So when you say the broker will come to the house, I am naturally very skeptical. Will s/he still come to the house if s'he is made aware that an attorney will review all paper work?
Good luck
Susan

Thaks for the information on fees! That will be a helpful guideline.

Susana: I couldn't agree with you more. The whole reason I'm pushing him to have me look over the paperwork is that someone is coming to his house and he isn't going to their office. That is the major red flag to me. That is why I want to look everything over w/ a fine tooth comb.

Triciae and Dave: He is using someone from the industry to get the loan. What I want do is make sure he undestands the product he is getting. I am concerned that he may not read the documenation thoroughly and the broker may take advantage of that. I'm there go give him someone w/ an analytical eye on his side.

We almost got caught in this type of scam. First, where is his office, his physical address, and check to see if they are licensed to do this in your state.
2nd--they will sell this loan as soon as posible to get more money and even before he gets the paperwork where to send the payments, and he will end up with late charges. Yes it almost happened to me until I informed the "jerk" that I would contact the Attorney General of CA.
3rd. Have him sign NO papers at that time, and inform the salesperson that all papers will be reviewed by the attorney. The after that, take the paperwork to a bank or credit union for comparison.
Yes we have been thru that and will never deal with a mortage company again.

A lot of totally legitmate mortgage companies come to your house to sign paperwork.

I have not set foot in a mortgage brokers office in about 20 years.
They come to you or the entire thing is handled by mail.

"I have a relative who is not very financially savvy and he has a Mortgage Broker coming to his house to help him refinance his mortgage at a better rate. "

Most all the bases have been covered in this thread already, but some things I'd check are: exactly what rate he is currently paying, what current rates currently are in your region, and what rate the broker is offering (*BEFORE* points). Also, I'd check with his current lender to see if they can refinance to a more competitive rate, and also with any other financial instutions he is currently a customer/member of.

make sure he's not getting pushed a lower payment in the form of an interest only option rather than a true lower rate on a fixed loan.

Our mortgage broker tried to push us into a 30 yr loan with a 10 year interest only option, by only quoting the monthly payments for the 10 yr interest only option and neglecting the payments for the next 20 years.

I don't think we ever got a straight answer out of him, but we were so far down the closing road on both buying/selling and I couldn't find a better rate elsewhere so we continued on, but with the terms we wanted.