
Sign up & start saving!
Get our weekly newsletter for the latest in money news, credit card offers + more ways to save
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Updated
While the benefits can be many, refinancing a mortgage comes at a cost. Most fees are listed under your loan’s closing costs and generally run between 2% and 5% of the loan amount. But you’ll also want to watch out for prepayment penalties and other charges.
Your closing costs are a set of charges that are due at closing, which can vary by state and lender. A few typical fees included in your closing costs are:
Application fees | You must pay this even if you change your mind or if your application is denied. | $75 to $300 |
---|---|---|
Loan origination fees | Administrative cost of processing your loans. Origination fees may include a series of smaller fees bundled together. | 0% to 1.5% of the loan amount |
Appraisal fees | Your lender sends an appraiser to assess your property’s value. | $300 to $700 |
Title report and insurance fees | Your lender initiates a title search to make sure you are the legal owner and there are no liens against the property. | $700 to $900 |
Flood certification fees | An assessment of whether your property is located in a flood zone. | $15 to $25 |
Inspection fees | A third-party inspector performs an examination of your home to check for issues such as structural damage or termites. | $175 to $500 |
Attorney fees | Expect this fee if your state requires an attorney to be present during closing. | $500 to $1,000 |
Early repayment fees | If you switch lenders, it could charge a penalty to close your loan early. This fee should be spelled out in your loan agreement. | 2% to 4% of the original loan amount |
Altogether, your closing costs may total about 2% to 5% of your final purchase price. For example, if you’re refinancing a $300,000 mortgage, your average refinance cost might run you between $6,000 and $15,000.
Even if your new monthly payment saves you, say, $100 a month, it may take years before you can recoup what you’ve spent on the closing costs. You may want to avoid refinancing if you plan to move or sell your home before you can recoup your money.
A few tips for how to reduce your closing costs:
There are several good reasons to consider a mortgage refinance.
To get new rates on your loan, you have to go through the entire loan process, which comes at a cost. Consider using a mortgage refinance calculator to make sure refinancing is a smart move and can actually save you money.
You only have until the end of March to get your next application in.
Smart strategies that homeowners can use to get rid of Private Mortgage Insurance (PMI).
We take a look at national home loan data & trends and speculate where the mortgage market is heading.
A refinished basement and rising home prices in their area set them up for success.
You might be able to apply for more funding on your PPP loan, get a second PPP loan or take advantage of a new grant program.
Find out who’s getting checks, unemployment benefits, student loan relief and more.
Loans of up to $50,000 available from this well-established lender.
Here’s how the ECRA could affect small business owners — if it’s passed.
Ways to protect your assets and what you need to know about marital debt.
Other lenders with higher approval rates can help — but only if you have the cashflow to support repayments.