If you’re refinancing a mortgage, that means you’ve already successfully applied for and received a home loan in the past and should have a good idea of what to expect.
The refinancing process is similar to the process you’ve already gone through. Unfortunately, this includes closing costs.
Refinancing mortgage closing costs
When refinancing your home loan, the specific closing costs vary based on your specific financial situation, your location, and your lender. On average, closing costs range between 2% to 6% of your total loan amount – this typically winds up being a few thousand dollars plus taxes (~$3,000- ~$6,000, give or take).
Here are a few of the most common refinancing mortgage closing costs:
- Loan Application Fees
Homeowners can expect to pay ~$100 to apply for a refinanced loan. This number varies by lender and can be charged upfront or rolled in with other closing costs at settlement.
- Credit Report Fees
When refinancing, lenders will typically pass the costs associated with pulling your credit reports on to you at closing. The exact amount varies depending on what reports are used but this should not exceed $100.
- Underwriting Fees
Lenders charge you a small percentage of the total value of the money you are borrowing to originate the loan. At 1% or 1.5%, this is often the most expensive of the refinancing mortgage closing costs.
- Home Appraisal Costs
A home appraisal is important for assessing the value of your home. This costs a few hundred dollars.
- Title Search & Insurance
Title search fees and new title insurance are required when refinancing because your original lender’s policy is no longer valid.
As with your original loan, your refinanced mortgage will have a settlement fee. This is paid to the title agent, notary, or attorney who reviews and confirms the closing process and all associated legal paperwork.
As you can see, there are quite a few potential refinancing mortgage closing costs but don’t let that detract you from applying – refinancing your mortgage can lower your interest rate and/or loan term, saving you thousands of dollars down the line.