How Much Does It Cost To Refinance A Mortgage? Breaking Down Typical Refinance Costs

7 Min Read
Updated Feb. 23, 2024
Red brick house next to pond.
Written By Kevin Graham

Refinancing can be an excellent way to lower your monthly mortgage costs or access the equity in your home. But refinancing isn’t free and, in some cases, it may not be worth paying the additional fees. This article will explain the overall cost to refinance a mortgage and how to determine whether it’s the right choice for you.

How Much Does It Cost To Refinance A Mortgage?

Borrowers who refinance can expect to pay between 2% and 6% of the total loan amount in closing costs. The exact cost will vary depending on the type of loan you’re taking out, your credit score and whether you’re doing a cash-out refinance.

If you want a better understanding of what you can expect to pay, you can check out this refinance calculator. You’ll enter information about your loan, ZIP code and credit score, and the calculator will estimate your closing costs.

View Your Refinancing Options

See recommended refinance options and customize them to fit your budget.

See What You Qualify For

Factors Affecting The Costs Of Refinancing A Mortgage

Here are the main factors that affect the costs of refinancing a mortgage:

  • Type of refinance: The type of refinance you’re doing — like a rate and term or cash-out refinance — will affect the total refinance cost.
  • Credit score: Your credit score affects the kind of interest rates you’ll receive on your refinance. Borrowers with credit scores of 740 or higher typically receive the best rates on lending products.
  • Location: Your location can also affect your refinance costs since mortgage rates will vary by city.
  • Home price: Since your closing costs are a percentage of the total loan amount, the more your home costs, the more you can expect to pay.
  • Mortgage type: Your home loan type will affect the cost of refinance. For example, VA loans may have lower interest rates, making refinancing less expensive.
  • Loan term: Loan terms also affect the cost of refinancing. For example, switching from a 30-year to a 15-year loan term will decrease your interest rate, and you’ll pay less in closing costs.

Breaking Down Typical Mortgage Refinance Fees

You can expect to see the following costs when you refinance your mortgage.

Mortgage Refinance Fee


Typical Cost

Application Fee

This is a fee your lender charges for taking and processing your refinancing application.

$75 – $500

Origination Fee

This fee covers the cost of setting up your loan.

0.5% – 2% of the loan amount

Mortgage Points

This is a one-time fee to lower your mortgage interest rate.

One point equals 1% of the total loan amount.

Credit Report Fee

This fee covers the cost of your mortgage lender pulling your credit report.

Around $35

Home Appraisal Fee

An appraisal assures your lender they aren’t lending you more than the property is worth.

$250 – $650

Title Search/Abstract Fee

A title search ensures that no liens have been taken out on the property.

$75 –$200

Title Insurance

Because you’re taking out a new loan, you’re required to take out new title insurance.

0.5% – 1% of the loan amount.

Recording Fee

If liens show up on the title or deed, you’ll have to pay to refile your paperwork with the county and pay a recording fee.


Reconveyance Fee

This is a fee you pay to remove the title’s lien from the previous mortgage.

$50 – $65

Flood Certification Fee

This certification ensures the flood zones are correctly marked.

An average of $600

Tax Service

This service notifies your lender if you miss a tax payment.

Around $50

Escrow Setup

You’re required to fund your escrow account to a certain level at closing. This account spreads the expense of property taxes and homeowners insurance out over the year.

1% – 2% of the purchase price.

Ways To Lower Mortgage Refinance Costs

Closing costs are inevitable, but there are ways you can lower your total mortgage refinancing costs. Here are four steps to consider taking:

Improve Your Credit Score

You’ll typically need a minimum credit score of 620 to qualify for a mortgage refinance. However, borrowers with a credit score of 740 or higher usually earn the best interest rates on their mortgage. If your credit score is lower than you would like, you can improve it by paying your bills on time and paying down debt.

Shop Around For A Mortgage

Your interest rate and total costs can vary depending on the lender you choose. Shopping around and comparing quotes from at least three different mortgage lenders can help you save on your refinance.

Negotiate Closing Costs

Your lender may be willing to negotiate closing costs with you. For example, your lender may sometimes waive the origination or application fees. 

Explore A No-Closing-Cost Refinance

If you agree to a no-closing-cost refinance, you’ll take on a higher interest rate in exchange for lender credits to cover your closing costs. However, while you’ll pay less in closing costs, your monthly mortgage payments will be higher, and you’ll pay more money over the life of the loan. But this may be worth it if you only play to stay in your home for a few years.

Why Should You Refinance Your Mortgage?

Refinancing isn’t right for everyone, but it may help you if you fall into one of the following categories. 

  • You can lower your interest rate and monthly payment: If refinancing lowers your mortgage interest rate, this will reduce your monthly payments and loan costs. Just make sure the new interest rate will be less than what you currently have on your mortgage.
  • You can change your loan term: Switching from a 30-year to a 15-year mortgage will reduce your interest payments and save you money over the life of the loan. However, because you’re shortening the time to pay off your loan, your monthly payment will be higher.
  • You can switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage: If you’re nearing the end of the introductory interest rate on your ARM, switching to a fixed-rate mortgage can help you save. It’ll also provide peace of mind because you’ll always know what your monthly principal and interest payments will be.
  • You can tap into your home’s equity to access funds: If you’ve built up significant home equity, you can use these funds to finance home improvements or other expenses through a cash-out refinance.

Cost To Refinance: FAQs

You may find the following information helpful if you’re on the fence about refinancing.

Do you lose equity when you refinance?

Typically, refinancing doesn’t affect the equity in your home. The only way you could lose equity is if you do a cash-out refinance and pull money from equity.

How can I avoid closing costs on a refinance?

You can avoid closing costs by doing a no-closing-cost refinance. This may make sense if you only plan to stay in your home for 5 years or less since it will help you lower the refinance cost.

Is it cheaper to refinance with my current lender?

Maybe, but it’s still a good idea to shop around and compare offers from different lenders. Most people stay with their current lender because it’s familiar, but you may find better terms and lower costs elsewhere.

Does refinancing hurt my credit?

Your lender will do a hard pull on your credit, lowering your credit score by a few points, but your score should bounce back quickly. And if it lowers your overall debt or monthly payments, refinancing can help your credit score in the long run.

Is it worth it to refinance to save 1%?

Yes, a 1% interest rate drop is significant, so if you can lower your rate by that much, refinancing is probably worth it.


Using a very basic example: A $300,000 fixed-rate, 30-year loan at a 7% interest rate will have a $1,996 monthly payment and result in $418,527 of total interest paid over the life of the loan. The same loan with a 6% interest rate will have a monthly payment of $1,799 and result in $347,515 total interest paid.

View Your Refinancing Options

See recommended refinance options and customize them to fit your budget.

The Bottom Line: Refinance Costs Are Different For Everyone

Refinancing isn’t the right choice for everyone, but don’t let the upfront costs deter you. These expenses can quickly pay for themselves if you earn a lower interest rate, a better loan type or shorter loan terms. If you’re ready to move forward, you can today.