Credible
Get Rates
  • Refinance Student Loans
    • Compare Options
      • Best Refinancing Companies
      • Lender Reviews
      • Refinance Student Loans
      • Student Loan Consolidation
    • Learn the Basics
      • Fixed vs. Variable Rates
      • Forgiveness Programs
      • Consolidation vs Refinancing
      • Repayment Plans
      • More on Student Refi
    • How to
      • Consolidate Your Student Loans
      • Pay Off Your Student Loans
      • Lower Your Interest Rate
    • Tools
      • Current Student Loan Refi Rates
      • Refinancing Calculator
      • Repayment Calculator
      • Student Loan Score Calculator
  • Student Loans
    • Compare Options
      • Private Student Loans
      • Parent Student Loans
      • Law School Loans
      • Medical School Loans
      • Graduate Student Loans
    • Learn the Basics
      • Student Loan Limits
      • Living Expenses
      • Applying for FAFSA
      • Federal Student Loans
      • Student Loan Interest Rates
      • More on Student Loans
    • How To
      • Pay for College
      • Take Out Student Loans
      • Apply Without Cosigner
      • Apply for Student Loans
      • Pay for Grad School
    • Tools
      • Best Private Student Loans
      • Current Student Loan Rates
      • Student Loan Interest Calculator: Estimate Payments
      • Lender Reviews
  • Personal Loans
    • Compare Options
      • Best Personal Loan Lenders
      • Lender Reviews
      • Get Personal Loan Rates
    • Learn the Basics
      • How to Qualify
      • How to Get a Loan
      • Where to Get a Loan
      • Personal Loans with Cosigner
      • Pay Off Credit Card Debt
      • More on Personal Loans
    • Best for
      • Credit Card Consolidation
      • Debt Consolidation Loans
      • Home Improvement Loans
      • Good Credit
      • Fair Credit
      • Bad Credit
    • Tools
      • Current Personal Loan Rates
      • Personal Loan Calculator
  • Mortgages
    • Compare Options
      • Mortgage Refinance
      • Home Loan
      • Best Mortgage Refinance Companies
      • Best Mortgage Lenders
      • Mortgage Preapproval
      • Mortgage Payment Calculator
    • Compare Rates
      • Mortgage Refinance Rates
      • 30-Year Fixed Refinance Rates
      • 15-Year Fixed Refinance Rates
      • Home Loan Rates
      • 15-Year Fixed Mortgage Rates
      • 30-Year Fixed Mortgage Rates
    • Learn the Basics
      • How to Buy a House
      • How to Refinance Your Mortgage
      • How to Get the Best Rate
      • Cash-Out Refinancing
      • More on Home Loans and Refi
    • Pay Off Mortgage
      • Home Equity to Pay Off Debt
      • Paying Off Mortgage Early
      • Mortgage Refinance Cost
  • Insurance
    • Insurance Products
      • Insurance Products
      • Learn more about home insurance
    • Compare Options
      • Compare Insurance Quotes
      • Home Insurance Guide
    • Learn the Basics
      • What Home Insurance Covers
      • How Much Home Insurance You Need
      • Estimate Your Home Replacement Cost
      • How to Change Home Insurance
  • Company
    • About
    • Reviews
    • Blog
    • Lenders
    • Editorial Guidelines
    • FAQs
    • Press
  • Find My Rate
Advertiser Disclosure

The Cost to Refinance a Mortgage (and How to Pay Less)

Refinancing isn’t free — you’ll have to pay closing costs — but there are ways you can pay less for your new loan.

Miranda Marquit Miranda Marquit Edited by Chris Jennings Updated April 25, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

Refinancing your mortgage can help you save money in the long run, as well as lower your monthly payment. However, before you move forward, it’s important to consider the costs of refinancing — and how to avoid or lower some of these fees.

Here’s a closer look at the cost to refinance a home loan:

  • Why refinance your mortgage?
  • How much does mortgage refinancing cost?
  • Can you get a no-closing-cost refinance loan?
  • Common mortgage refinancing fees
  • How to lower some closing costs
  • How to know if refinancing is worth the cost

Why refinance your mortgage?

Refinancing your mortgage can offer a number of financial benefits, including a lower interest rate, shorter loan term, and access to your home’s equity.

Lower your rate

One of the main reasons to refinance your mortgage is for a lower interest rate. With a lower rate, you can save hundreds — or thousands — of dollars over time. On top of that, a lower rate can translate to lower monthly payments, which can help with your monthly cash flow.

Most experts agree that if you can shave at least 0.75% off your interest rate and plan to stay in your home for several years, refinancing is worth it — even with all of the refinancing fees.

Credible makes refinancing and finding a lower rate easy. You can see personalized mortgage refinance rates from our partner lenders in the table below in just three minutes. We also provide transparency into lender fees that other comparison sites typically don’t.

Don’t Miss: How to Get the Best Mortgage Refinance Rates

Change your loan term

If you want to pay off your mortgage faster, changing your loan term to a 15-year or 20-year term can help you get out of debt quicker. When combined with a lower interest rate, the long-term savings can be significant.

However, you’ll need to plan for potentially higher monthly payments.

Switch your loan type

For homeowners with an adjustable-rate mortgage (ARM), refinancing your mortgage can make a lot of sense, especially if your fixed introductory period is coming to an end and interest rates are low.

By refinancing to a fixed-rate mortgage, you’ll gain stability in your mortgage payments and avoid rising rates down the road. Lenders will allow you to borrow up to 80% of your home’s total value.

Tap your home equity

A cash-out refinance gives you the opportunity to tap into your home equity. With this option, you’ll refinance your mortgage for more than you owe and receive the remaining amount in cash, which you can use for a number of purposes, such as making home improvements or paying down high-interest debt.

How much does mortgage refinancing cost?

Refinancing costs money — but depending on the circumstances it can be worth it. You’ll pay closing costs, which include fees for the origination, home appraisal, and recording, among many others.

In general, you can expect to pay between 2% and 5% of the total loan amount. The average cost to refinance a mortgage is $2,398, according to ClosingCorp.

Factors that affect refinance closing costs

After applying for the refinance, your mortgage lender will give you a Loan Estimate that includes a list of closing costs, your interest rate and monthly payment, and other details about the loan. Some of the factors that influence your total cost of borrowing include:

  • Loan size: Generally, a larger loan balance carries a larger monthly mortgage payment and higher closing costs.
  • Location: Where you live can have a big impact on your closing costs when you refinance. Property taxes, appraisal costs, and other closing expenses are all priced differently across the U.S.
  • Discount points: You can choose to pay the lender a fee in exchange for a lower interest rate. The cost of each point amounts to 1% of the mortgage loan balance.
  • Type of refinance: Generally, cash-out refinances come with higher interest rates compared to rate-and-term refinances because they carry more risk for the lender. You might also incur private mortgage insurance if your home equity decreases.
  • Fees: Closing costs may include fees such as an application fee, appraisal fee, and title fee. Some lenders may waive or lower these fees, but they’ll also vary with every transaction and in each region.
Example: Let’s say you refinance your mortgage and the new loan balance is $100,000. Closing costs (including taxes) may range from 2% to 5% of the loan balance, which amounts to $2,000 to $5,000 in this example.

Can you get a no-closing-cost refinance loan?

There are lenders that advertise no-closing-cost refinance loans. This means you won’t have to pay for the closing costs upfront. Instead, the lender will roll the closing costs into the new mortgage loan amount, spreading out the cost over the life of the loan.

The lender might also provide you with a lender credit, which works the same way as points, just in reverse. The credit covers the closing cost at closing, then the lender recoups the expense by charging you a higher interest rate on your refinanced mortgage.

Let’s say you have a mortgage balance of $100,000, and you decide to refinance into a new 15-year loan term. The closing costs amount to $5,000 and you receive an interest rate of 3%. If you roll the closing costs into the loan principal, you wind up paying $1,193 more over the loan term.

Pay closing costs upfrontAdd closing costs to loan principal
Starting loan balance$100,000$105,000
Total interest paid over loan term$24,332$25,525
Amount saved$1,193—

Check Out: How Long It Takes to Refinance a Home

Common mortgage refinancing fees

If you’re thinking about refinancing your mortgage, here are some common refinancing fees to consider:

FeeEstimated cost
Loan origination fee0.5% to 1.5% of the loan amount
Appraisal fee$300 to $500
Title insurance fee$1,000
Credit report fee$30 to $50
Prepaid interest chargesDepends on your interest rate and when your loan closes
Recording feeVaries
Mortgage pointsDepends on how many points you pay for
(1% of your mortgage loan amount equals 1 point)

Here’s what you can expect from each of these costs to refinance your mortgage:

  • Loan origination fee: The lender will charge you a loan origination fee to process, underwrite, and close the loan for you. Expect to pay 0.5% to 1.5% of the loan amount. If the mortgage is $200,000, that means you should expect to pay between $1,000 and $3,000 in loan origination fees (sometimes called underwriting or processing fees).
  • Appraisal fee: When you refinance your home, you’ll have to pay for a home appraisal to determine the current property value. Appraisers generally charge $300 to $500.
  • Title insurance fee: You’ll need to purchase a new title insurance policy when you refinance in case there are errors with the ownership records. The cost on average is $1,000, but could be more or less depending on where you live and the loan amount.
  • Credit report fee: Lenders will review your credit report to determine your creditworthiness for a new loan. Sometimes the lender takes care of this fee, but it might fall on you, so you should know what to expect. The credit report fee is typically between $30 and $50.
  • Prepaid interest charges: Your refinancing lender might require you to pay the first month’s interest upfront when you close on the loan. The exact amount you’ll have to pay will be based on your interest rate and when your loan closes.
  • Recording fee: The mortgage transaction must be recorded with the county your home is in, but this cost varies.
  • Mortgage points: Sometimes you can pay additional points or fees in order to get a lower interest rate. A “point” is equal to 1% of the mortgage loan amount, so if you had a $100,000 loan, a point would cost $1,000. The more points you pay, the lower the interest rate you’ll be offered.

How to lower some closing costs

There are ways to reduce your refinancing fees and lower your overall cost to refinance:

  1. Boost your credit: To get the best rate possible, focus on improving your credit score and debt-to-income ratio before refinancing your mortgage.
  2. Negotiate fees: If you have solid credit and a steady income, you are in a strong position for negotiation. Ask the lender to waive certain fees, such as the origination fee, if applicable. If they agree, you could save hundreds.
  3. Stick with the same title insurance company: If you work with the same title insurance company that you used when you first purchased your home, you can save a significant amount of money on title fees. When you refinance, you could receive up to 40% off on your title fees.
  4. Skip paying for mortgage points: With mortgage points, you pay the lender to reduce your interest rate and monthly payment. But if you have good credit, you can qualify for a low interest rate without needing to pay for mortgage points, so you may be better off holding on to your cash instead.
  5. Comparison shop for third-party fees: You can and should look for the least expensive options available for third-party services, which may include the title search, home inspection, and survey.
  6. Ask to waive the appraisal fee: If a property has been appraised fairly recently and prices have not significantly changed, a lender might be able to waive a new appraisal, potentially saving you hundreds of dollars.

How to know if refinancing is worth the cost

When you add up all of the fees and costs associated with refinancing your mortgage, you could be looking at paying thousands of dollars. So, how do you know if refinancing your mortgage is worth it?

Although this answer will vary depending on your unique situation, it really boils down to what you hope to get out of refinancing your home loan.

You want to save on interest

If you’re considering refinancing to save money over the life of your loan — like by getting a lower interest rate or shortening your term — do the math to see how much money you’ll truly save after all of the fees and costs are accounted for.

Find your breakeven point, and work backward from there to figure out whether refinancing makes sense. If it will take you five years to break even, and you expect to sell your house before then, refinancing could end up costing you more than you would save.

To calculate your breakeven point: Use a refinance breakeven calculator to see how much you could save with a lower interest rate. Then, add up the costs to refinance your mortgage.

You should be able to see a timeline of when your interest savings will finally overcome the closing costs. The longer you plan to stay in your home, the more likely you are to recoup your refinancing costs and come out ahead.

If you think refinancing is the right move, Credible can help you get started. You can compare multiple lenders and see prequalified rates in as little as three minutes without leaving our platform.

Find out if refinancing is right for you

  • Actual rates from multiple lenders – In 3 minutes, get actual prequalified rates without impacting your credit score.
  • Smart technology – We streamline the questions you need to answer and automate the document upload process.
  • End-to-end experience – Complete the entire origination process from rate comparison up to closing, all on Credible.

Find My Refi Rate
Checking rates will not affect your credit

Trustpilot

You want a lower monthly payment

If you’re considering refinancing to make your monthly mortgage payments more manageable, it’s a good idea to weigh that convenience against the costs, as well.

Add up your specific closing costs and make sure that, even with paying those, your lower monthly payment is still worth it. If the amount you would save each month ends up going toward closing costs anyway, it might not be the right decision for you.

For example: Let’s say you can save $300 per month by refinancing to a lower monthly payment. If your refinancing fees amount to $4,000, it will take about 13 months to account for the cost of the loan.

However, if that takes some of the pressure off your budget, and the interest savings over time are still large enough, there’s a good chance it’s worth it.

Carefully consider your situation and run the numbers to see if refinancing makes sense for you. In the end, it’s about finding a solution that works for you.

Keep Reading: When to Refinance a Mortgage: Is Now a Good Time?

About the author
Miranda Marquit
Miranda Marquit

Miranda Marquit is a mortgage, investing, and business authority. Her work has appeared on NPR, Marketwatch, FOX Business, The Hill, U.S. News & World Report, Forbes, and more.

Read More

Home » All » Mortgages » The Cost to Refinance a Mortgage (and How to Pay Less)

Mortgage Refi Requirements


  • Refinancing Requirements
  • Credit Score Needed to Refinance
  • How Long It Takes to Refinance
  • Refinance Closing Costs
  • Home Appraisal for Refinancing

Mortgage Refi Guides

  • How to Refinance Your Home
  • When to Refinance
  • How Often Can You Refinance

Tools and Resources

  • Refinance Your Mortgage
  • Best Refinance Companies
  • Pay Off Your Mortgage Early
  • Today’s Mortgage Refi Rates
  • How to Find the Best Lender
  • Lender Reviews

  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to email a link to a friend (Opens in new window)

Related Articles

Mortgage Refinance, Mortgages

How Soon You Can Refinance: Typical Waiting Periods By Home Loan

Mortgage Refinance, Mortgages

Complete Checklist of Mortgage Refinancing Requirements

Mortgages, Mortgage Refinance

Cash-Out Refinance: How It Works and When to Get One

  • Read More
    • Refi Student Loans
    • In School Loans
    • Personal Loans
    • Mortgages
    • Insurance
  • Resources
    • Lender Reviews
    • Loan Calculators
    • Student Loan Score Calculator
    • Data Insights
    • Debt Statistics
    • Sitemap
  • Compare
    • Student Loan Refinance
      • Current Student Loan Refi Rates
    • Student Loan Consolidation
    • Private Student Loans
      • Current Student Loan Rates
    • Personal Loans
      • Current Personal Loan Rates
    • Refinance Mortgage
      • Mortgage Refinance Rates
        • 15-Year Fixed Refinance Rates
        • 30-Year Fixed Refinance Rates
    • Home Loans
      • Home Loan Rates
        • 15-Year Fixed Mortgage Rates
        • 30-Year Fixed Mortgage Rates
    • Insurance
  • Top Lenders
    • Best Student Loan Refi Companies
    • Best Private Student Loans
    • Best Personal Loans
    • Best Mortgage Lenders
    • Best Mortgage Refinance Companies
  • Company
    • About
    • Reviews
    • Blog
    • Editorial Staff
    • Editorial Guidelines
    • News
    • Press
  • Legal
    • Terms of Use
    • Privacy Policy

© 2023 Credible


Credible Operations, Inc. NMLS ID# 1681276 | NMLS Consumer Access | Licenses and Disclosures
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Disclosure

Affiliated Business Arrangement Disclosure

Credible Operations, Inc., (“Credible”) has a business relationship with Young Alfred, Inc., (“Young Alfred”), an insurance broker. Please click here for the full Affiliated Business Arrangement disclosure form. You are not required to use Young Alfred as a condition for settlement of your loan.

Similarly, Young Alfred has a business relationship with Credible, a mortgage broker. Please click here for the full Affiliated Business Arrangement disclosure form. You are not required to use Credible as a condition to obtain access to any settlement services, such as homeowners or other insurance products.

Acknowledgement

By clicking “Accept” below, I/we acknowledge that I/we have read the applicable full disclosure form, and understand that any referrals by Credible for insurance settlement services or any referrals by Young Alfred for mortgage settlement services, may result in Credible, Young Alfred, its parent company, and/or its affiliates receiving a financial or other benefit.