Refinance Closing Costs Explained: Fees & Costs [2026]

Refinance Closing Costs Overview

Closing costs on a refinance fall into several categories:

Lender Fees Breakdown

Origination Fee

• What it is: Lender's charge for processing your loan
• Typical amount: 0.5-1% of loan amount
• $500,000 example: $2,500-$5,000
• Negotiable: Yes, especially with strong credit/income

Discount Points

• What it is: Optional fee to buy down interest rate
• Typical amount: 1 point = 1% of loan, reduces rate ~0.25%
• When worth it: If keeping loan 4+ years typically
• Optional: You choose whether to pay points

Application/Processing Fees

• Application fee: $300-$500 (some lenders waive)
• Processing fee: $300-$600
• Underwriting fee: $400-$800
• Note: May be bundled into origination fee

Appraisal Fee

• What it is: Professional home valuation
• Typical amount: $400-$700 (higher for complex properties)
• When required: Most refinances require new appraisal
• Exception: Some streamline refinances waive appraisal

Credit Report Fee

• What it is: Lender's cost to pull credit
• Typical amount: $30-$50
• Note: Minor cost but required

Title Services Breakdown

Title Search

• What it is: Research to verify clear property title
• Typical amount: $200-$400
• Purpose: Ensures no liens or claims against property

Title Insurance (Lender's Policy)

• What it is: Insurance protecting lender against title issues
• Typical amount: $500-$1,500 (based on loan amount)
• Required: Yes, by all lenders
• Can shop: Yes, you can choose title company

Settlement/Escrow Fee

• What it is: Fee for managing closing process
• Typical amount: $500-$1,000
• Can shop: Yes, you can choose settlement agent

Notary Fee

• What it is: Notarizing closing documents
• Typical amount: $100-$200

Government Fees

Recording Fees

• What it is: Fee to record new mortgage with county
• Typical amount: $50-$250
• Set by: Local government, not negotiable

Transfer Taxes (Some States)

• What it is: State/local tax on mortgage recording
• Typical amount: Varies widely by location
• California: Generally no mortgage tax
• Some states: Can be significant

Prepaid Items & Escrow

Prepaid Interest

• What it is: Interest from closing to first payment
• Typical amount: Daily rate × days until month end
• Strategy: Close at end of month to minimize

Property Tax Escrow

• What it is: Reserve for upcoming property taxes
• Typical amount: 2-6 months of taxes
• Note: Old escrow often refunded

Homeowners Insurance Escrow

• What it is: Reserve for insurance premiums
• Typical amount: 2-3 months premiums
• Note: Old escrow often refunded

Sample Closing Cost Breakdown

Ways to Reduce or Manage Closing Costs

1. No-Closing-Cost Refinance

Lender covers costs in exchange for higher rate:

• Rate increase: Typically 0.25-0.50% higher
• Best for: Short-term ownership or uncertain timeline
• Trade-off: More interest over loan life

2. Roll Costs Into Loan

• How it works: Add closing costs to loan balance
• Requirement: Sufficient equity
• Trade-off: Larger loan, more total interest

3. Negotiate Lender Fees

• What's negotiable: Origination fee, application fee, processing
• Leverage: Competitive quotes from other lenders
• Strong borrowers: Better negotiating position

4. Shop Title Insurance

• Your right: Choose your own title company
• Potential savings: $200-$500+
• Strategy: Get 2-3 quotes before closing

5. Time Your Closing

• End of month: Minimizes prepaid interest
• Savings: Could be hundreds of dollars

Frequently Asked Questions

How much are closing costs on a refinance?

Refinance closing costs typically range from 2-5% of the loan amount. On a $500,000 refinance, expect $10,000-$25,000 in total closing costs. Costs vary by state, loan type, and lender.

Can I roll closing costs into my refinance?

Yes, most refinances allow you to roll closing costs into the new loan balance if you have sufficient equity. This means no out-of-pocket costs but a higher loan amount and more interest paid over time.

What is a no-closing-cost refinance?

A no-closing-cost refinance means the lender covers closing costs in exchange for a higher interest rate (typically 0.25-0.50% higher). You pay no upfront costs but pay more in interest over the loan term.

Are refinance closing costs tax deductible?

Points paid on a refinance are typically deductible over the life of the loan, not all at once like purchase points. Property taxes and mortgage interest prepaid at closing may also be deductible. Consult a tax advisor for your specific situation.

How can I reduce refinance closing costs?

Compare quotes from multiple lenders, negotiate fees, ask about lender credits, consider no-closing-cost options, and shop for title insurance. Working with a wholesale broker who can compare across many lenders often reveals the best overall cost structure.