How Much Does It Cost to Refinance a Mortgage?

Average Refinance Closing Costs, "No Cost" Refinancing, and More

Most mortgage refinances involve costs, which vary by lender, loan program, property, and loan amount. Use itemized Loan Estimates to compare the actual charges. A general percentage or an older third-party average is not a substitute for a quote for your transaction.

What's Included in Refinance Closing Costs?

Closing costs can vary for different homeowners based on factors like property location, loan type, and loan amount. Some common closing costs associated with refinancing a mortgage include:

• Lender Fees: These fees may be charged by lenders to process your refinance application, sometimes referred to as "application fees" or "origination fees." The specific amount can vary between lenders.
• Mortgage Discount Points: Some lenders may charge you fees known as discount points to secure a lower interest rate. One mortgage discount point is equal to 1% of the loan amount. You can often opt to pay discount points for a lower interest rate.
• Mortgage Insurance: A conventional refinance generally requires PMI when the new loan exceeds 80% of the accepted home value, subject to program rules. Most FHA refinances require an upfront premium and an annual MIP collected monthly.
• Homeowners Insurance and Property Taxes: Hazard insurance premiums and property taxes may also be included in your closing costs.

APR reflects the interest rate and certain finance charges, but it does not include every closing expense and is not a dollar total of your closing costs. Compare APR, the loan amount and term, itemized costs, lender credits, and cash to close on otherwise comparable Loan Estimates.

Can You Get a "No Closing Cost" Refinance?

A "no closing cost" refinance usually means the costs are covered through lender credits, often in exchange for a higher interest rate. The costs do not disappear: compare the upfront credit with the payment and interest over the time you expect to keep the loan.

Lenders may also offer refinancing options with no "out-of-pocket" closing costs. In such cases, you won't pay the closing costs at settlement; instead, they will be added to your loan amount. For example, if you refinance a $200,000 mortgage with $8,000 in closing costs, your new mortgage amount would be $208,000, with the costs paid off over time through your monthly principal and interest payment.

How Much Does It Cost to Refinance a Conventional Loan?

Conventional refinance costs vary by transaction. A stronger credit profile may help with pricing, and a new loan at 80% LTV or less generally avoids PMI. Existing FHA, VA, or other mortgages may be refinanced into a conventional loan if the borrower and property meet the new program's requirements.

How Much Does It Cost to Refinance an FHA Loan?

An FHA refinance may involve lender and third-party costs plus mortgage insurance. Most FHA loans have a 1.75% upfront premium on the base loan amount, which may be financed. FHA streamline refinances have specific documentation, benefit, and eligibility requirements; an eligible FHA-to-FHA refinance may receive a credit toward the new upfront premium. Ask for an itemized estimate.