The best mortgage lender for most people is definitely Rocket Mortgage® and New American Funding

The best mortgage lender for most people is definitely Rocket Mortgage® and New American Funding

From taking advantage of a lower monthly payment to ditching your FHA mortgage insurance, there are plenty of reasons why you might want to refinance.

But how much should you expect to pay? Let’s take a look at the average cost of a refinance and what you might expect to pay for each of your closing costs.

Best Places to Refinance:

  • Best Overall: Quicken Loans
  • Best for Self-Employed Borrowers: New American Funding
  • Best for Simplicity: Credible
  • Best for Fast Refinances: Figure
  • Best for In-Person Service: Wells Fargo
  • Best Places to Refinance:
  • Refinance Fees Explained
  • Best Mortgage Lenders for Refinancing
  • Refinance the Right Way
  • Frequently Asked Questions

Refinance Fees Explained

Just like when you get a home loan, you’ll need to pay a variety of costs at closing when you refinance a mortgage. The specific costs you’ll pay and fees you’ll face will vary depending on your refinance options and where you live. As a general rule, you can expect to pay 2% to 3% of the total value of your loan when you refinance.

Let’s take a look at some of the most common refinancing closing costs, the average cost of each item and what each fee covers.

Application Fee

Before you receive a decision on your refinance, your lender will bill you for the cost of processing your application. The application fee usually covers the cost of a credit check and an underwriting analysis of the financial information you submit with your refinance. Some of the best refinance mortgage companies have eliminated the application fee, but most lenders still charge them in some capacity.

Expect to pay about $200 for your refinance application fee if your lender charges 1. Keep in mind that this fee is due even if you aren’t approved for a refinance, so make sure you meet your new lender’s criteria before you apply.

Appraisal Fee

An appraisal is a professional estimation of the amount of money your home is worth. During an appraisal, a home value expert called an appraiser will take a walk around your home, do some outside research and assign a value to your home.

Lenders require a new appraisal on most refinances. This is because they need to be sure that your home value hasn’t fallen since you bought your house. New appraisals are required on all forms of cash-out refinances.

Not every type of refinance requires an appraisal. If your lender requires you to get a new appraisal, you can expect to pay about $500 for this fee.

Title Insurance and Search

Title insurance is a type of protection that safeguards both you and your lender from competing claims on the property you’re buying. During a title search, a title insurance company will research the history of the property to ensure that you don’t have any liens or claims on the property that will prevent the lender from seizing it if you default on your mortgage.

When you refinance with a new lender, you’ll usually need to pay for another title search and title insurance policy. The title search and insurance process typically cost a total of about $900. The good news is that, unlike other types of insurance, you don’t need to pay for title insurance every month – after you pay for it once at closing, you’re protected for as long as you have your loan.

Loan Origination Fee

Your loan no credit check payday loans Madisonville TN origination fee is typically the largest expense you’ll pay when you refinance your mortgage. The loan origination fee compensates your lender for drawing up the paperwork for your loan, calculating your interest rate and scheduling the inspections and appraisals you’ll need before you can close your refinance.