Does Refinancing Come with Closing Costs?

October 4, 2021


Refinancing Closing Costs

Every mortgage loan comes with closing costs — including refinances.

Generally speaking, refinancing closing costs are very similar to those you paid with your initial mortgage. They include things like origination and application fees, mortgage points, title insurance, and more, and they’re based on your loan amount, your lender, and a number of other factors.

Still, despite their similarity to the costs seen on your original loan, they won’t be exactly the same — nor will they come to the same amount. Here are a few differences you might notice when it comes to refinancing closing costs:

You may not need an appraisal — or a survey.

Depending on how long ago your first appraisal was — and how hot your housing market is, there’s a chance your lender won’t require a new appraisal. Appraisal costs vary from place to place, but in most cases, this should save you at least a few hundred dollars at the closing table.

The same goes for your survey. If you still have a copy of your original survey and nothing has been changed on the property since, you can likely skip a new survey as well. This should shave anywhere from $350 to $700 off your closing costs.

Mortgage insurance might be removed.

If you’ve paid down your mortgage a good amount, you may be able to avoid mortgage insurance on your refinance. Typically, you’ll need at least 20% equity in your house to do this — meaning your mortgage loan accounts for no more than 80% of your home’s value.

If this applies to you, it equals more savings. Freddie Mac estimates that mortgage insurance costs conventional loan borrowers anywhere from $30 to $70 per month for every $100,000 borrowed.

You might be able to roll the closing costs into your loan.

This is likely the biggest difference between closing costs on purchase loans vs. refinances. With purchase loans, your closing costs will need to be paid on closing day — before you can even get your keys.

With a refinance, however, many lenders let you finance those costs, or roll them into your loan balance. Be careful before going this route, though. While this can certainly save you cash upfront at closing, it also means a larger loan amount. This equates to a higher monthly payment and more in long-term interest costs over time.

How much will your refinance closing costs be?

The exact amount of closing costs you’ll need to cover will depend on your lender, your loan amount, where your property is located, and several other factors. When you apply for preapproval, your lender should give you a loan estimate, which will break down all the estimated costs and fees (including how much you’ll need to bring to closing) in detail.

Are you considering a refinance? Get in touch with Premier Nationwide Lending today for guidance.

Premier Nationwide Lending is an Equal Housing Opportunity lender. Sponsored by NTFN, Inc. 6201 West Plano Parkway, Suite 100, Plano, TX 75093 | NTFN NMLS 75333.

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