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What Are Refinancing Fees? Mortgage Refinancing Costs to Plan For

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When you refinance a home loan, you often have to pay refinancing fees. Freddie Mac estimates the average cost of these fees is $5,000 for a borrower. However, the amount you're refinancing, the lender you select, and your location will determine your fees. Here's what you need to know about mortgage refinancing costs.

What are refinance fees?

Although fees vary, these are some of the refinancing costs you can expect to pay.

Application fee

Many refinance lenders charge a fee to apply for a loan. This fee typically runs between $75 and $300.

Origination fees or underwriting fees

A loan origination fee or underwriting fee is the cost lenders charge to cover administrative costs and evaluate your eligibility for a loan (this process is called underwriting). These lender fees are usually 0.5% to 1.5% of the amount borrowed.

Credit check fee

Your mortgage lender will obtain your credit report to check your credit score. Credit reporting agencies charge for this service and lenders pass the cost on to you. It's typically around $25 to $50.

Appraisal fees

An appraisal fee typically costs between $250 and $700. Lenders want to ensure your home is worth enough to guarantee the refinance loan, and an appraisal determines its value.

Inspection fees

It's also common for mortgage refinance lenders to require an inspection to ensure your home is structurally sound. A home inspection typically costs anywhere from $175 to $500.

Mortgage insurance fees

If your refinance loan is for more than 80% of your home's value, you will owe fees for mortgage insurance. Often, you'll pay premiums for private mortgage insurance as part of your monthly payment but may owe an upfront fee. It could be as little as .01% of your loan amount for a streamline FHA refinance or simple refinance of a loan taken out before 2009 -- or as high as 1.75% of your loan's value.

Flood certification fee

Flood certification may be required to demonstrate that you are not in a flood zone. It can cost between $15 and $25 in most cases to obtain a certificate showing whether your property is in a flood zone.

Survey fee

Surveys are necessary to determine the boundaries of a property and identify easements. You can expect to pay between $150 and $500 for a survey, but large or complicated properties could cost much more.

Early repayment fees

Many mortgage lenders don't charge prepayment penalties, but those that do charge around 2% of your loan amount in the first few years and gradually decline. If your existing loan carries a prepayment penalty, it will have to be paid when refinancing. Conforming mortgages obtained after Jan. 10, 2014, do not have these fees, thanks to Dodd-Frank reforms.

Title search and insurance fees

This typically costs between $400 and $1,000. Lenders want to ensure there are no claims against your property, such as tax liens. You will need to pay for a title search to confirm this, and for insurance in case something was missed in the search.

Discount points

Current refinance rates are competitive, but you may be able to reduce your interest rate by paying discount points. These discount points generally cost 1% of your loan's value and reduce your rate by 0.25%.

Closing fees

Attorneys or title companies preside over closings and must be paid. Closing costs are usually between $500 and $1,000.

How much will I pay in refinance fees at closing?

The amount you'll pay in refinance fees can vary because different lenders charge different fees. Typically, your refinancing fees are between 2% and 6% of your loan amount. Your lender should provide a loan estimate so you'll know exactly what it will cost to refinance your current mortgage and secure a new mortgage.

Still have questions?

Here are some other questions we've answered:

The Ascent's best mortgage refinance lenders

Refinancing your mortgage could save you hundreds of dollars for your monthly mortgage payment and secure you tens of thousands of dollars in long-term savings. Our experts have reviewed the most popular mortgage refinance companies to find the best options. Some of our experts have even used these lenders themselves to cut their costs.

FAQs

  • Refinancing fees on a mortgage are fees you pay to secure a refinance loan. They include:

    • An application fee: typically $75 to $300
    • Origination or underwriting fees: typically 0.5% to 1.5% of the loan value
    • Credit check fees: typically $25 to $50
    • Appraisal fees: typically $250 to $700
    • Inspection fees: typically $175 to $500
    • Mortgage insurance fees: .01% to 1.75% of the value of the loan
    • Flood certification fees: $15 to $25
    • Survey fees: $150 to $500
    • Early repayment fees: $0 to 2% of the value of the loan
    • Title search and insurance fees: $400 to $1,000
    • Discount points: $0 to 1% of your loan's value
    • Closing fees: $500 to $1000
  • Mortgage refinancing fees vary by lender. Typically, they are 2% to 6% of your loan's value.

  • Refinancing fees can't be avoided because there are costs involved with securing a loan. Some lenders offer no-closing-cost loans, but in those cases the fees are usually rolled into the amount of your loan or are paid over time in the form of a higher interest rate.

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