Refinancing your mortgage costs about as much (and sometimes more) as it cost to get your mortgage in the first place. According to the most recent report from the Consumer Financial Protection Bureau, homeowners pay an average of $7,329 in closing costs—about $650 more than for a mortgage. More than half of the closing costs came from optional discount points purchased to lower mortgage interest rates.[1]
With 30-year fixed rates hovering at 6.06% as of April 2026, the refinance math isn’t as straightforward as it was when rates dropped below 3% during the pandemic.[2] Whether refinancing makes sense now depends on your current rate, how long you plan to stay in the home, and what you’re trying to accomplish: a lower payment, a shorter term, or access to your equity.
“It depends on what you’re looking to accomplish, and how the market is at that point,” says Josh Bradley, Executive Loan Officer at Best Interest Financial (NMLS #1312222). “The nice thing is, you can roll all of the refinance costs into the new loan."
I refinanced my home about 5 years ago, so I know firsthand how the process works and what you can do to lower your refinance costs. I’ll tell you more about what I paid to refinance, how refinancing costs break down, how to pay less, and how to know if the costs are worth the savings in the long run.
Estimate your refinance savings
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Not sure if the savings are worth it? Use our mortgage calculator above to estimate your new monthly payment at today's rates, then compare it to what you're paying now. The difference is your monthly savings, and dividing your total closing costs by that number gives you your break-even point in months.
Average refinancing costs: what to expect and what I paid
Expect to pay 3-6% of your loan principal when refinancing. For example, on a $300,000 refinance, that means you’ll pay $9,000 to $18,000.[3]
Keep in mind your location could affect your total. Homeowners in New York and Florida, for instance, typically pay more than those in California or Utah to refinance a mortgage.[4]
When I refinanced my Florida home in 2021, I paid $11,095—about 6.1% of the $181,500 loan. High home insurance premiums and state taxes drove up my closing costs significantly.
What about no-cost refinancing?
You may see some lenders advertise no-cost refinancing, but free loans don’t exist. Lenders offset closing costs by charging higher interest rates and, in some cases, rolling fees into the loan balance. You might avoid upfront costs but end up paying more over the loan’s lifetime through higher monthly payments.
For example, on a $300,000 refinance with $9,000 in closing costs folded into the loan, a lender might raise your interest rate from 6% to 6.5%, raising your monthly payment by about $150 more than what it would be if you just paid the closing costs upfront. That totals to roughly $54,000 over 30 years, which is far more than just paying the costs upfront.
What’s included in refinance costs?
| Type of refinance fee | Average cost |
|---|---|
| Lender origination fee | 0.5% to 1% of total loan amount[5] |
| Appraisal fees | $314–$424[6] |
| Credit report | $40–$60[7] |
| Survey fees | $376–$769[8] |
| Title insurance and settlement services | $1,500 to $3,000[9] |
| Government recording fees | $265[10] |
| Discount points | 1% of the loan amount per point[11] |
Bill Egan, senior mortgage loan officer and co-founder of Babcock Mortgage, says one of the biggest surprise costs for his clients is the escrow reset. Depending on your closing date, you could pay thousands more upfront. For example, if property taxes are due a few months after closing, you might need to fund 11 months of taxes into escrow.
Ryan Meehan, a licensed property tax consultant in California and Texas and cofounder and CEO of TaxDrop, a property tax appeal platform, also sees clients surprised by escrow jumps. “The new lender runs a fresh escrow analysis and accounts for property tax increases. If you haven't checked your assessment recently, that reset can eliminate your expected savings.”
He advises filing a property tax protest alongside your refinance to keep escrow costs steady.
Refinance costs include lender fees, third-party fees, government fees and taxes, prepaid costs, and escrows. Here’s what falls under each category:[12]
Note: Appraisals aren’t always required. “If you get away with not having to do an appraisal, then you don’t have to pay for an appraisal,” Bradley explains. Many lenders now offer appraisal waivers on rate-and-term refis where the loan-to-value ratio is low and the property data is strong. When an appraisal is required, expect to pay “anywhere from $500 to $800,” according to Bradley.
My real-life example of how much it cost me to refinance
I didn’t pay a loan origination fee on my home refinance, nor a survey fee—since I used the same survey from when we bought the house. However, I did get a small lender credit, meaning my lender likely partially offset my closing costs by charging a slightly higher interest rate. Since my interest rate was still a dreamy 2.99%, I wasn’t complaining.
Like I said earlier, my total closing costs from refinancing came to $11,095. Of that amount, $2,712 were loan costs. I didn’t pay any origination fees or points, but I did pay $726 for services I couldn’t shop for (like the appraisal and credit report) and $1,986 for services I could shop for, mostly title-related fees.
The remaining $8,688 were other costs, which included:
- $1,897 in taxes and government fees (mainly transfer taxes)
- $4,859 in prepaid items, including a year of homeowner’s insurance and prepaid interest
- $1,932 for my initial escrow deposit at closing
I received a $305 lender credit, which reduced my total closing costs from $11,400 to $11,095. In total, I needed to bring $11,063 in cash to close, and $32 of the closing costs were financed into my loan amount, bringing my new loan to $181,500.
Types of refinance (and how costs differ)
Before you can estimate what refinancing will cost, you need to know which type of refinance fits your situation. Costs, timelines, and documentation requirements vary depending on whether you’re doing a simple rate swap or withdrawing cash.
Rate-and-term refinance
This is the most common type. You replace your existing mortgage with a new one that has a different rate, term, or both. The loan amount stays roughly the same (minus any principal you’ve paid down). Because you’re not taking cash out, closing costs tend to land on the lower end of the 2–6% range.
Cash-out refinance
A cash-out refi replaces your mortgage with a larger one and gives you the difference in cash. It’s a way to tap your home equity for renovations, debt consolidation, or investing. Costs run slightly higher because the loan amount is bigger, and lenders charge a pricing adjustment for cash-out loans.
Bradley breaks it down simply: “A typical cash-out refinance takes anywhere from a couple of weeks to three days. Mainly depends on whether an appraisal is needed. I’ve had times where we close a loan within a few days.”
When does a cash-out refi beat a home equity loan? Generally, when you can improve your primary mortgage rate at the same time, or when you need a large lump sum and prefer a single monthly payment over carrying two loans.
Streamline refinance
If you have an FHA, VA, or USDA loan, you may qualify for a streamline refinance. These programs skip the appraisal and reduce paperwork, which lowers your costs. FHA streamline refinances require an upfront mortgage insurance premium of 0.01% of the loan amount (down from the standard 1.75% on a new purchase).[13] VA Interest Rate Reduction Refinance Loans (IRRRLs) waive the appraisal entirely.
Is refinancing worth the cost?
When refinancing makes sense
- Your current rate is at least 0.75–1 percentage point above today’s rates
- You plan to stay in the home at least 3–5 years past closing
- You want to switch from an adjustable rate to a fixed rate before your rate resets
- You have high-interest debt you can consolidate through a cash-out refi
When you should think twice
- You’re less than 3 years from paying off your mortgage (restarting the amortization clock costs more in interest than you’d save)
- You’re planning to sell within the next 2 years
- Your credit score has dropped since your original loan, which could mean a higher rate
- You’d need to convert from a 15-year to a 30-year term just to lower the payment (you’d pay significantly more interest over the life of the loan)
To know if refinancing is worth the cost, first think about how long it’ll take you to break even and how much you’ll save overall compared to your original loan. Our mortgage calculator can help with the math. You can also ask your loan officer to run this math for you.
Then consider whether you’ll stay in your home past the break-even point. “If you keep the loan beyond the break-even point, refinancing makes sense. If not, it should be structured differently or avoided,” advises Egan.
Keep in mind that plans can change unexpectedly. COVID proved that, but smaller life circumstances can also prompt an earlier move.
For example, when we refinanced, our break-even point was about 4 years, going off the monthly mortgage payment savings. But after having a baby, our home and its location no longer suited our family. We moved 2.5 years after refinancing, making it a financial loss overall for us.
But in today’s rate environment, the math is more nuanced. With 30-year rates currently at 6.06%, refinancing is a clear win if you locked in at 7–8% in 2023 or early 2024. If your rate is already in the low 6% range, the savings may not justify the cost.[2]
Tax implications of refinancing
Refinancing has a few tax angles worth knowing about, though you should consult a tax professional for your specific situation.
Mortgage interest deduction. If you itemize, you can deduct the interest on up to $750,000 of mortgage debt ($375,000 if married filing separately). Refinancing doesn’t change this, but if you increase your loan balance through a cash-out refi, the additional interest is only deductible if the funds are used to “buy, build, or substantially improve” the home that secures the loan.[14]
Discount points. Points paid on a refinance can’t be deducted all at once like they can on a purchase. Instead, you deduct them ratably over the life of the loan. On a 30-year refi, that’s 1/30th per year.
Cash-out refi proceeds. The cash you receive from a cash-out refinance isn’t taxable income, since it’s borrowed money, not earned income. However, using those funds for non-home purposes limits the deductibility of the interest.
3 ways to pay for refinance costs
The most common approaches to pay for refinancing are paying cash upfront, rolling costs into the loan, and taking lender credits.
Here’s how each option compares:
Paying cash upfront
Pros
- Usually gets you the lowest possible interest rate
- Smaller loan balance in the long run
- Generally the best option for max long-term savings
Cons
- Requires liquid cash
- Reduces emergency reserves
Rolling costs into the loan
Pros
- Minimal out-of-pocket cost
- Preserves savings funds
- Usually makes refinancing more affordable in the short term
Cons
- Potentially higher mortgage payment
- Potentially higher long-term loan costs
Taking a lender credit
Pros
- Usually a lower upfront payment
- Possibly faster break-even point
- Tends to lower your total cost if selling soon (higher interest rates have less impact in the short term)
Cons
- Potentially higher lifetime interest cost
- Potentially higher mortgage payment
How to lower your refinance costs
Improving your financial profile, negotiating fees, and comparing lenders can lower refinancing costs. Egan also recommends doing the following:
- Experimenting with loan terms: Sometimes a 25-year loan prices better than a 30-year term.
- Verifying your occupancy classification: Primary homes get lower rates than second homes or investment properties.
- Timing your rate lock strategically: Experienced loan officers who track market trends can help you lock in at the optimal moment.
- Get at least 3 quotes. A 2026 ICE Mortgage Technology study found that borrowers who compared quotes from three or more lenders saved an average of $1,500 in closing costs.[15]
- Negotiate the origination fee. Some lenders will reduce or waive it, especially if you’re bringing a large loan balance.
- Shop title insurance separately. You’re not required to use the title company your lender suggests. Ask for reissue discounts if you’ve refinanced in the past few years.
- Ask about appraisal waivers. Many lenders offer them on rate-and-term refis with strong property data and low LTV ratios.
- Experiment with loan terms. A 25-year loan sometimes prices better than a 30-year term.
- Compare APR, not just the rate. The annual percentage rate folds in closing costs and gives you the true cost of the loan. You’ll find it on page three of any Loan Estimate under “Comparisons.”
When it comes to credit scores, Egan notes that raising your credit score by just 20 to 40 points can reduce your interest rate by up to 0.375% if it moves you into a higher credit tier.
Why refinance costs vary between lenders
On your loan estimate, you’ll notice there are services you can and can’t shop for—all of which vary by lender. That’s why it’s essential to get at least two quotes. Here’s an example from the Consumer Financial Protection Bureau of what a loan estimate will look like.
In my experience, one of my loan quotes had much higher fees than those of the lender I ultimately chose, including appraisal, recording, and transfer taxes.
The most important number when comparing loans is the annual percentage rate (APR). You’ll find it on page three of any loan estimate under “Comparisons.” If you don’t have a loan estimate, you’ll need to ask your lender for this document. APR represents your loan’s true cost, including closing costs. Lower APRs are better.
A refinance isn’t your only option for accessing equity. Compare: home equity loan vs. refinance.
How today’s rate environment affects the decision
As of writing, the average 30-year fixed mortgage rate sits 6.06%, according to Freddie Mac. Rates have been fluctuating in the mid-6% range after briefly dipping below 6% earlier this year.
The MBA expects 30-year rates to stay above 6% through the rest of 2026, while Fannie Mae is more optimistic, predicting rates just under 6% by year-end. Either way, we’re not heading back to the sub-3% rates of 2020–2021 anytime soon.
What that means for you: if you locked in at 7% or higher in 2023, refinancing now could save you $200–$400 per month on a $300,000 loan. If your rate is already in the low 6% range, the savings may be minimal unless you’re also changing your loan term or pulling cash out.
One practical approach: get a quote now to understand the math, and if the savings are marginal, monitor rates for the next few months. As Bradley puts it, refinancing makes sense when “you’re looking for extra cash to pay off higher interest debt” or when “you can get a better return on that money than the interest you’re going to pay.”
Ready to explore all your refinance options?
Refinancing costs money upfront, but it can meaningfully improve your monthly cash flow and long-term financial position when the math works. The key is running the numbers for your specific situation, not relying on rules of thumb.
If you have questions about refinancing or want to explore how it could save you money, start by getting a quote from Best Interest Financial. We run the numbers every way we can to find the best refinance option for your situation, and we’ll be upfront about tradeoffs so you know exactly what you’re getting.
Why you should trust us
This guide is written and reviewed by the editorial team at Best Interest Financial, a licensed mortgage lender (NMLS #2469842) based in West Bloomfield, MI. Our loan officers have closed thousands of loans across purchase, refinance, and home equity products.
The refinance cost estimates and advice in this article come from three sources: current industry data from Freddie Mac, the CFPB, and LodeStar Software Solutions; direct input from Josh Bradley, an Executive Loan Officer at Best Interest Financial (NMLS #1312222) who works with refinance borrowers daily; and the author's own experience refinancing a home in 2021.
We don't just write about refinancing. We do it. That means the advice here reflects insights from our loan officers, not generic guidance written for search engines.
Best Interest Financial is the publisher of this website. Our editorial content is produced independently by our editorial team and is not reviewed, approved, or influenced by our lending operations prior to publication. When we recommend that readers get a quote from Best Interest Financial, we are referring to our own lending services, and we may earn revenue if you choose to work with us.
FAQ about the cost of refinancing
How much does it cost to refinance a $400,000 home?
Expect to pay $8,000 to $24,000 (2–6% of the loan amount). Actual costs depend on your state, credit score, and whether you’re doing a rate-and-term or cash-out refi. Get multiple quotes to compare.
What’s the difference between a rate-and-term refi and a cash-out refi?
A rate-and-term refinance replaces your mortgage with a new one at a different rate or term, keeping the loan balance roughly the same. A cash-out refi replaces your mortgage with a larger loan and gives you the difference in cash. Cash-out refis cost slightly more because of pricing adjustments and the larger loan balance.
Does refinancing hurt your credit?
Yes, but the impact is typically small and temporary. The hard credit inquiry and new account may lower your score by a few points. Your score usually rebounds within a few months if you maintain good payment habits.
What credit score is needed to refinance?
Most lenders require at least a 620 credit score for a conventional refinance. FHA, VA, and other government-backed programs may accept lower scores. The higher your score, the better your rate, and even a 20–40-point improvement can reduce your rate meaningfully if it moves you into a higher credit tier.
Can I refinance if I have less than 20% equity?
Yes, though you’ll likely pay private mortgage insurance (PMI) on a conventional loan if your equity is below 20%. FHA streamline refinances don’t require a new appraisal, so your equity level may not be a barrier. VA loans also have no equity requirement for IRRRLs.
How long does a refinance take to close?
Josh Bradley of Best Interest Financial says it varies by product: “A typical cash-out refinance takes anywhere from a couple of weeks to three days. If you were to do a HELOC, those typically don’t need appraisals, and can close within a week.” A standard rate-and-term refi with an appraisal typically takes 30–45 days.