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What is the cost to refinance a loan?

Refinancing your mortgage can be a great option to get a lower interest rate that will lower your monthly payment or leverage the equity in your home to pay off debt. Let’s take a look at some of the costs associated with refinancing your mortgage loan.

The cost to refinance your mortgage varies depending on several factors including:

Loan amount, your credit score, your home equity, mortgage term, mortgage type, your lender, and your location.

Your Closing Disclosure document, which will be issued at least three days before closing, will tell you exactly what you’ll need to pay at closing. Here’s an overview of some of the closing costs you might see when you refinance.

WHAT TO EXPECT IN A REFI

Fees You Can Expect During a Refinance

Appraisal fee: Most lenders require appraisals before refinancing. Appraisal costs vary based on your location, but on average appraisers will charge $300 - $500.

Origination fee: These are the fees the lender charges for setting up the loan.

Attorney fee: Some states require an attorney to review the loan paperwork. Attorney fees will vary widely by state.

Credit report fee: This fee covers the cost of pulling your credit score. It usually costs around $30 - $50.

Title search and insurance: This is the fee associated with the title search and issuing title insurance. It varies widely based on your location.

Recording fee: This covers the cost to record the transaction with your county.

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To avoid any surprises, you should expect to pay between 2% - 5% of your loan on closing costs when you refinance.

Some lenders do offer a no-closing cost mortgage for qualified buyers. Usually, this is achieved by raising the interest rate on your loan or by rolling the fees into the total loan balance. While this will decrease your upfront costs, the tradeoff may be a higher monthly payment or paying more interest over the life of the loan.

When trying to decide if refinancing is worth it, some things to keep in mind include your current loan terms, your loan balance, how long you plan to stay in the house, and how many years you have left on your home loan. One approach is to calculate your break-even-point, meaning how long will it take for you to recoup the closing costs of refinancing from your monthly mortgage payment savings gained. A loan officer can help you go over your options and explain the costs and potential savings of refinancing.

Should You Refinance Calculator

Take a look at our Should I Refinance Calculator to get a better idea of how refinancing can benefit you. Fill in the information about your home, interest rate, your current mortgage, and your potential new mortgage, and the calculator will automatically populate how much lower your monthly payment could be and how much interest you could save.

Calculate Your Refi Payment