Understanding the costs of refinancing

Refinancing can save you hundreds of dollars per month. But before you make the decision to refinance, it’s important to understand how all the associated costs add up.


Although refinancing your current mortgage can be financially advantageous, you’ll likely incur costs totaling several thousand dollars to do so.  

As with any large financial endeavor, it’s highly recommended that you do your homework, ask questions, and look carefully at your short- and long-term goals before deciding to refinance. You’ll want to work closely with your lender to do a cost-benefit analysis and determine whether refinancing makes sense for you.

Refinancing costs

When you refinance, you are required to pay closing costs like those you paid when you initially purchased your home. The average closing costs on a refinance are approximately $5,000, but the size of your loan and the state and county where you live will play big roles in how much you pay. Refinancing costs include your loan origination fee and the following:

  1. Government recording costs.

  2. Appraisal fees.

  3. Credit report fees.

  4. Lender origination fees.

  5. Title services.

  6. Tax service fees.

  7. Survey fees.

  8. Attorney fees.

  9. Underwriting fees.

In addition, if you plan on buying discount points to buy down your mortgage rate, you’ll have to pay for that up front. Buying discount points can save you money over the life of the loan, but whether it makes sense depends on your personal situation.

Remember, you can refinance through your existing lender or a new lender. It’s highly recommended that you interview several lenders to compare their rates and terms before you select the loan that works best for you.

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Options for refinancing