- Refinancing usually costs between 2% and 5% of your loan amount, covering fees such as loan origination, appraisal, title insurance, and recording.
- Refinancing is worth it when the savings from a lower interest rate or better loan terms exceed the upfront closing costs over time.
- Lower your costs by shopping around, negotiating fees, improving your credit score, or exploring no-closing-cost refinance options.
Refinancing your mortgage can save you thousands of dollars over the life of your loan, but it comes with upfront costs.
According to LodeStar Software Solutions, the average mortgage refinance costs $2,403 in closing costs, though total expenses typically range from 2% to 5% of your loan amount.
For example, refinancing a $300,000 loan could cost between $6,000 and $15,000. The good news? Shopping around can help you secure a better deal.
Refinance Closing Costs
Every mortgage refinance comes with closing costs. These include the fees charged by your lender to prepare, process, and underwrite your loan, as well as expenses paid to other entities for services and required documents.
Let’s take a closer look at the common closing costs refinance borrowers are responsible for.
| Type of Fee | Estimated Cost |
| Origination/Underwriting | 0.5 – 1% of the loan amount |
| Title Insurance/Title Search | 0.5% of the loan amount |
| Attorney Fee | $500 – $1,000 |
| Appraisal Fee | $300 – $600 |
| Recording Fee | $100 – $250 |
| Credit Report | $80 – $150+ |
Note: These are estimates. Many of these will vary by location and other factors. Your actual closing costs will likely differ.
Origination/Underwriting Fee: 0.5–1% of the Loan Amount
The origination/underwriting fee covers the lender’s administrative expenses, including processing your application, underwriting the loan, and related services. This typically equals 0.5% to 1% of the loan balance.
Title Insurance/Title Search: Roughly 0.5% of the Loan Amount, but Varies by State
When you refinance, you’re taking out a new mortgage loan. Your lender will require title insurance to protect against any potential title issues with the property. Even if you had title insurance when you originally purchased the home, your refinance lender needs assurance that their stake in the property is protected from unforeseen title problems going forward. Title insurance typically runs about 0.5% of your refinance loan amount.
That said, costs vary significantly by state and often range from a few hundred to a few thousand dollars. Many borrowers qualify for reissue or refinance discounts, so the final cost isn’t always tied to a fixed percentage.
A title search will also be required to review your home’s public records, verify ownership, and identify any claims or liens. Expect to pay between $75 and $200 for this service.
Attorney Fee: $500–$1,000
Hiring an attorney to review your loan documents and represent your interests at closing can be a smart move — though it isn’t required in every state. Expect to pay between $500 and $1,000, or more, for these services.
Appraisal Fee: $300–$600
Lenders require an appraisal to confirm your home’s current market value. A new home appraisal is required for nearly all mortgage refinances, including rate-and-term and cash-out refinances. The primary exception is government-backed streamline refinance programs (FHA, VA, and USDA), which may waive the appraisal requirement.
Appraisal costs typically range from $300 to $600 or more.
Learn about the different types of streamline refinance options:
Recording Fee: $100–$250
Recording fees are charged by local and state governments to ensure your new mortgage and related legal documents are properly entered into the public record. These typically range from $100 to $250.
Credit Report Fee: $80–$150+
Your lender will pull your credit report to evaluate your creditworthiness. This fee typically ranges from $80 to $150, and sometimes more.
Property Taxes: Varies Based on Local Taxes and Time of Year
If your refinance closes near your property tax due date, you may need to prepay a portion of property taxes at closing. This isn’t a true lender fee — you’d owe these taxes regardless of whether you have a mortgage.
After closing, your current lender will send you a check for any unused portion of prepaid taxes from your existing escrow account. Collecting taxes upfront helps prevent tax liens and protects both you and the lender. The exact amount depends on your home’s assessed value, your closing date, and when your county collects taxes.
Optional Discount Points: 0–2% of the Loan Amount
Discount points are an optional upfront fee that lets you buy down your interest rate, typically by 0.125% to 0.25% per point. Each point generally costs about 1% of the loan amount — so on a $400,000 refinance, one point would cost roughly $4,000.
Homeowners Insurance: Varies by Location
You’ll typically need to fund a few months of homeowners insurance reserves to establish a new escrow account. A full-year premium may be required if your policy renews soon or your lender requires it.
Other Ways Refinancing Can Cost You
Closing costs aren’t the only expenses to keep in mind. Refinancing can carry hidden costs that affect your finances over time.
Extended Loan Terms
Refinancing a 20-year mortgage back into a 30-year term may lower your monthly payment, but it can cost you tens of thousands of dollars more in interest over the life of the loan — even if your rate drops.
Reduced Home Equity
Cash-out refinancing reduces your equity stake in your home. Borrowing against your equity leaves you with less financial flexibility and increased exposure if home values decline.
Mortgage Interest Deduction
“The deductibility of your mortgage interest could be more limited, especially if you are refinancing a primary home to fund non-home-related personal expenses, which are not tax-deductible,” cautions Dennis Shirshikov, a professor of economics and finance at City University of New York/Queens College.
How to Lower Your Refinance Costs
By doing your homework, you can often pay less than average on many of the closing costs described above. Here are the most effective strategies.
Shop Several Lenders
Getting quotes from multiple lenders is one of the most effective ways to reduce your refinancing costs. It allows you to compare rates, terms, and total fees side by side — and negotiate from a position of knowledge. Don’t focus solely on the lowest rate; look for the best overall combination of rate, terms, and fees.
Improve Your Credit Score
Improving your credit score before applying for a refinance can save you thousands. A higher score helps you qualify for a lower interest rate, reducing both your monthly payment and the total interest paid over the life of the loan. Even a modest improvement can meaningfully change the rates you’re offered.
How Much Does Your Credit Score Impact Your Rate?
While your rate depends on multiple factors, we can get a sense of a credit score’s impact by looking at average rates from Rate Update:
During this timeframe, borrowers with a 780+ credit score sometimes saved a full percentage point on their rate compared to borrowers with a 620 score.
Negotiate Closing Costs
Don’t be afraid to ask for lower fees from your lender, title company, attorney, or other parties involved in the closing. Some lenders may waive or reduce charges — such as application or origination fees — to win your business.
Keep in mind that your loan-to-value (LTV) ratio can also affect costs. A higher LTV typically results in pricing adjustments — such as a slightly higher rate or additional points — rather than higher third-party fees.
Consider Paying Discount Points Upfront
Paying discount points at closing can lower your interest rate by 0.125% to 0.25% per point, reducing your monthly payment over the life of the loan. The catch: you’ll need more cash upfront, so this strategy only makes sense if you plan to stay in your home long enough to recoup the cost through interest savings.
Some lenders may allow you to roll discount points into your refinanced loan balance, though this increases the total amount you owe.
Use a Streamline Refinance
FHA Streamline, VA IRRRL, and USDA Streamline-Assist refinances often skip the appraisal requirement and use simplified documentation, which can meaningfully reduce your closing costs.
What About No-Closing-Cost Refinances?
There’s another way to reduce out-of-pocket costs at closing: a no-closing-cost refinance.
A no-closing-cost refinance lets you avoid paying those expenses upfront — but the costs don’t disappear. Instead, the lender either rolls them into your loan balance or offsets them with a slightly higher interest rate.
For example: Rather than paying $5,000 upfront, you might accept a 0.25% higher rate or add $5,000 to your loan balance. This can make sense if you’re short on cash or plan to sell or refinance again within a few years — but it does come at a long-term cost.
“While this option reduces upfront costs, it often results in higher monthly payments or total costs over the life of the loan. It’s best suited for borrowers who need immediate cash flow flexibility or who plan to sell their property in the short term,” advises Shirshikov.
How to Calculate if Refinancing Is Worth It
Not sure if a refinance pencils out for your situation? Here are the key factors to evaluate.
Breaking Even
Your break-even point is the moment your cumulative monthly savings offset the total cost of refinancing. It’s the clearest way to know whether a refinance is worth it.
For example, if your closing costs total $6,000 and you save $200 per month on your mortgage payment after refinancing, you’d break even in 30 months (6,000 ÷ 200 = 30).
To calculate your break-even point:
- Add up your total closing costs.
- Calculate your monthly savings by subtracting your new payment from your current payment.
- Divide your total closing costs by your monthly savings. In the example above: $6,000 ÷ $200 = 30 months.
You can also use our refinance break-even calculator to run the numbers for your situation.
Factors That Impact the Cost
What you pay to refinance depends on a variety of factors, including your:
- Chosen lender: Every lender charges different fees and rates.
- Loan amount and term: The more you borrow and the longer the term, the higher your costs may be.
- Refinance type: A rate-and-term refinance is typically less expensive than a cash-out refinance.
- Credit score: A higher score can mean lower rates and fees.
- Loan-to-value ratio: Calculated by dividing your loan amount by your home’s appraised value — a lower ratio signals less risk to lenders and can result in better pricing.
When to Refinance
Refinancing is worth it when the long-term savings outweigh the upfront costs.
“For example, reducing your interest rate by even 1% on a $300,000 loan can save $200 or more per month, which adds up significantly over time,” says Shirshikov. “It’s also beneficial to refinance when you can consolidate high-interest debt or switch from an adjustable-rate mortgage to a fixed-rate loan for greater stability.”
Cash-out refinancing can also be worthwhile when the funds are put to strategic use, such as home improvements that increase your property’s value.
Ready to find out how much you could save? See today’s refinance rates at Refi.com and get a personalized quote in minutes — no obligation, no commitment.
