How Much Are Refinance Closing Costs?

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After months of saving and applying for a new mortgage, refinance closing costs can come as an unpleasant surprise. Let’s help you understand what closing costs cover and how you can get started on refinance with one of the best mortgage lenders.

Best Mortgages for Refinance Closing Costs:

What are Closing Costs?

Closing costs include fees for the expenses and services needed to obtain a new mortgage. You’ll often have to pay these costs whether you’re refinancing or buying a home. Although the buyer is responsible for most of the closing costs, the seller also has a few to pay.

Luckily, closing costs are not cast in stone. You have some latitude with these expenses, and there are ways to reduce them, negotiate for a lower price or have them covered by another party in the transaction.

How Much Are Refinance Closing Costs?

Closing costs run between 2% and 3% of the total loan amount. So, for a $500,000 home refinance, you should expect to pay anything between $10,000 and $15,000 in closing costs. 

The best way to cover your closing costs is to pay them out-of-pocket, as a one-time expense. You could also finance these costs by folding them into your loan — if your lender allows it. However, you will pay interest on the closing costs through the life of your mortgage. You should also note that closing costs vary depending on the loan amount, the loan type and the geographical area.

What Are the Typical Closing Costs?

You should receive an outline of the closing costs from your lender when you first apply for refinancing. Be sure to review them carefully and ask questions about anything you don’t understand.

Lender Fees

Every home loan is financed through a mortgage company, private bank or non-profit credit union. These entities have overhead costs, so your closing costs go toward paying these costs. Here are the common lender fees you’ll likely incur:

  • Origination fee: This is charged by the lender for evaluating, preparing and processing your mortgage loan. This can include notary fees, document preparation and the lender’s attorney fees. Although this fee is typically 1% of the loan value, the cost can be lower when you pay a higher down payment.
  • Mortgage broker fee: This fee is charged by the mortgage brokers — companies that help you shop for various lenders. You shouldn’t be charged an origination fee and mortgage broker fee.
  • Discount fee: Also known as discount points, these are fees paid to the lender to lower your interest rate over the life of your mortgage. 1 discount point is equal to 1% of the loan amount. This fee is generally non-negotiable, but you can shop around for lenders offering the lowest fees.
  • Application fee: Some lenders charge an upfront, non-refundable fee to initialize your application for a loan. This fee usually covers the cost of processing your request for a new loan and may include costs like administrative expenses and credit checks. The application fee usually varies depending on your lender and the amount of work that goes into processing your application.
  • Lock fee: It can take some weeks to process your loan application and interest rates fluctuate daily. Some lenders will lock your rate for a set fee as your application processes.

Services Ordered by Your Lender

Various services are required to process a mortgage loan. Your lender collects fees to cater for each of the services, which are included in the closing costs.

  • Credit report fee: Lenders pull your credit information when you apply for a loan. This allows them to assess your credit history and decide whether or not to approve your loan application and how much money to lend you. Your reported credit score will also impact your interest rate. Credit bureaus charge for the report.
  • Flood certification fee: Homes in the U.S. are either in a flood zone or not. As a result, your lender might impose a fee to check whether your property is within a flood prone area. If it does, you’ll need to buy flood insurance.
  • Tax service fee: This fee is paid to the company hired to ensure that all tax liens on the home are paid. A county or city may seize a home with any past-due taxes, so lenders like staying away from such situations.
  • Wire transfer fee: This fee covers all charges associated with wiring the loan money. You will probably not pay this fee if you use a cashier’s check to pay for your down payment and closing costs.  

Third-party fees

These are the costs of services by other parties who are associated with your mortgage but aren’t your lender. The following fees are often the same for all lenders, so they shouldn’t be a crucial comparison point when shopping for a refinance mortgage lender.

  • Appraisal fee: Your lender wants to know if your property is worth the amount quoted in your loan application. Professional valuers are hired to estimate your home’s market value based on sales of similar homes in your area. A property value estimate is done for 2 reasons: The lender wants to verify the amount you require is justified and ensure it can recover the value of your home should you default on your payments.
  • Home inspection fee: Many lenders need a home inspection, especially if you’re getting a government-backed mortgage. This is done to assess the mechanical and structural integrity of the house and to detect other conditions like termites or asbestos in the home.
  • Survey fee: Occasionally, a title company may need to determine the property lines and legal boundaries. In such a case, a survey is needed though it isn’t common.
  • Escrow fee: An escrow company deals with all the funds involved in the transaction to ensure all parties pay and get paid appropriately.
  • Notary fee: The escrow company doesn’t charge a fee if you sign the final loan documents at their office. If you’re not available to sign them at their office, they will charge a fee to send a licensed notary to oversee the proper execution of the loan documents.
  • Settlement fee: This is a fee paid to an attorney or closing agent who oversees the execution of all closing documents.

Refinance Closing Costs

Just like when you first bought your home, you’ll need to pay closing costs when refinancing your loan. If you can’t meet all closing costs upfront, your lender might add them into your loan balance. This will, however, translate into a higher interest rate on your loan. 

Here are the closing costs from 5 lenders: 

Mortgage CompanyClosing Costs
Axos Bank$2,995
Bank of America$1,685
North American Savings Bank$995

Current Refinance Rates

Refinance rates change daily, with factors like the nature of the economy and the current housing supply. Here are the current refinance rates from 5 lenders.

Mortgage CompanyCurrent Refinance Rate
Veterans United3.583% APR
Rocket Mortgage3.886% APR
Chase3.466% APR
SunTrust3.631% APR
better.com3.527% APR

*mortgage rates as of 2/20/20

Best Mortgage Lenders for Refinancing

Refinancing has numerous benefits. You could score a better interest rate, lower your monthly payments or even leverage your home for cash to pay off other expenses — but only if you do it right. With so many lenders offering refinance options, it can be difficult to choose the right one for you. Benzinga has researched the best refinance mortgage companies you can use to take cash out of your home.

1. Rocket Mortgage® by Quicken Loans®: Best Overall

Rocket Mortgage® by Quicken Loans® is a nationwide lender with a host of mortgage options. With an A+ Better Business Bureau rating, the company takes pride in great customer service. The lender brings smartphone app convenience to the entire refinance process, with online asset and income verification speeding up the process. With this lender, you can get government-backed as well as conventional refinance mortgages. You also get customized loan recommendations based on your individual refinance objectives.

Applying for refinancing takes less than 30 minutes. Just open its refinance application, answer a few questions about your current loan and get rates and options immediately. From FHA and jumbo to USDA and VA, Rocket Mortgage® can service any type of loan.

2. better.com: Best for Online Experience

Being a completely online mortgage company, better.com offers an online mortgage experience ideal for tech-savvy borrowers. Besides offering a seamless and easy-to-navigate loan application process, the company also allocates a dedicated loan officer for each borrower.

You can work with your loan officer to explore the various mortgage products available, including FHA mortgage, conventional mortgage, refinance mortgage, fixed-rate mortgage, jumbo mortgage, etc. The company averages 21 days to close on your mortgage, constantly updating you on the mortgage status throughout the process. Should you get a better refinance rate from another lender, better.com will beat it by at least $1,000, courtesy of the Better Price Guarantee feature. The lender currently offers conventional and FHA loan refinancing.

3. Veterans United: Best for VA Loans

Veterans United is one of the few lenders focused on serving America’s military community, including active duty and veteran service members. This lender offers competitive fees and interest rates and can guide any military application through the loan process.

Besides a 24/7 customer service, Veterans United also provides free credit counseling services. The company also offers some home loans outside the VA program, allowing for 0% down payment if you have a credit score of at least 620. Veterans United charges an interest rate of 3.25% for a 30-year fixed VA loan.

4. SunTrust: Best for Customer Service

SunTrust boasts an array of customer service options. You can begin your application online or use its online tool to find a branch or loan officer near you. You can also call or email the lender, or start a conversation with online chat. The lender is also a good choice if you’re looking for low down payment requirements, usually as low as 3%.

The company also offers comprehensive educational resources and guides about refinancing. SunTrust offers VA, FHA, fixed, jumbo and conventional mortgage loans to all who meet the eligibility requirements, at an interest rate of 4.10%.

5. Chase: Best for Competitive Interest Rates

Chase is a great mortgage refinance lender for those who want the benefit of competitive interest rates. Besides being transparent about all its mortgage rates, Chase also offers great resources, such as refinance articles and FAQs.

Its loan options include refinance, purchase, jumbo, home equity, adjustable, fixed, VA, USDA and FHA, some of which feature down payment as low as 3%. Although the lender has a mobile app, you can apply for prequalification through its website. It takes 21 days on average to close on your loan.

Apply for a Refinance Today

Before settling on the best mortgage company for refinancing you’ll need to compare different lenders and their quotes, look into loan discounts and interest rates and assess their loan options and closing costs. Be sure to check your credit score and understand your current loan balance and the state of your finances. This way, you’re sure to get the best terms and lowest rates possible when you apply.

Frequently Asked Questions

Q: How do I get pre-approved?

Q: How do I get pre-approved?

First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!


Q: How much interest will I pay?

Q: How much interest will I pay?

Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.


Q: How much should I save for a down payment?

Q: How much should I save for a down payment?

Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.



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