Refinance Closing Costs: What to Expect and How to Minimize

Refinancing closing costs in 2026 typically range from $2,000 to $7,000, depending on your loan amount, location, and lender. Many [homeowners](/blog/home-insurance-savings) are shocked when they see the final bill—but understanding these costs upfront puts you in control.

This comprehensive guide breaks down every fee you'll encounter, reveals which costs are negotiable, and shows you how to slash your closing costs by 30-50%.

The Complete [Closing Cost Breakdown](/blog/mortgage-closing-costs-breakdown)

Lender Fees (60% of Total Costs)

1. Origination Fee: $0-$3,000

Also called an "underwriting fee" or "processing fee," this compensates the lender for processing your loan. On a $300,000 refinance, expect 0.5-1% of the loan amount.

• Typical cost: $1,500-$3,000
• Negotiable: YES—this is your biggest opportunity to save
• How to reduce: Shop multiple lenders; many online lenders charge $0

2. Application Fee: $0-$500

Covers the lender's initial costs to review your application.

• Typical cost: $300-$500
• Negotiable: YES—many lenders waive this
• Red flag: Lenders charging both application AND origination fees

3. [Discount Points](/blog/mortgage-points-explained): $0-$6,000+

Optional fee to buy down your interest rate. One point = 1% of loan amount = typically 0.25% rate reduction.

• Typical cost: $3,000 per point on $300,000 loan
• Negotiable: NO—but optional
• When it makes sense: If you'll keep the loan 5+ years

Example calculation:

• Paying 1 point ($3,000) reduces rate from 6.5% to 6.25%
• Monthly savings: $47
• Break-even: 64 months
• Makes sense only if you'll stay 6+ years

Third-Party Fees (30% of Total Costs)

4. Appraisal Fee: $300-$800

Required for most refinances to determine your home's current value.

• Typical cost: $400-$600 for standard homes, $600-$800 for complex properties
• Negotiable: NO—but you can choose the appraiser
• Waiver possibility: Some lenders offer appraisal waivers for low-risk loans (typically need 30%+ equity)

5. Title Search and Insurance: $500-$2,000

Verifies property ownership and insures the lender against title defects.

• Title search: $200-$400
• Lender's title insurance: $300-$1,500 (varies wildly by state)
• Negotiable: Sometimes—you can shop for title companies
• Refinance discount: Many title companies offer 40-60% discounts for refinances within 10 years

6. Survey Fee: $0-$500

Some lenders require a property survey (not common for refinances).

• Typical cost: $350-$500
• Often waived: If you have a recent survey (within 10 years)

7. Credit Report Fee: $25-$100

Covers the cost of pulling your credit from all three bureaus.

• Typical cost: $50-$75
• Not negotiable: But some lenders inflate this—$100+ is excessive

8. Flood Certification: $15-$25

Determines if your property is in a flood zone.

• Typical cost: $20
• Not negotiable: Required by law

9. Inspection Fee: $0-$500

Some lenders require a pest or structural inspection (uncommon for refinances).

• Typical cost: $300-$500
• Often waived: Unless significant property concerns exist

Government and Recording Fees (10% of Total Costs)

10. Recording Fees: $50-$250

County charges to record your new mortgage.

• Typical cost: $100-$150
• Not negotiable: Set by your county
• Varies by location: [California](/blog/california-heloc-guide) often charges $200+, while Texas may charge $50

11. Transfer Taxes: $0-$3,000+

Some states charge transfer taxes even on refinances (fortunately rare).

• Typical cost: $0 in most states
• High-cost states: New York, Maryland, Delaware charge refinance transfer taxes
• Not negotiable: Set by state law

Prepaid Costs and Escrow (Variable)

12. Prepaid Interest: $200-$1,000

Interest from your closing date to the end of that month.

• Calculation: Daily interest rate × days until month-end
• Pro tip: Close at month-end to minimize (close on the 28th instead of the 1st)

13. Property Tax Escrow: $500-$3,000

Lenders may require 2-3 months of property taxes upfront.

• Refund coming: Your old lender refunds your existing escrow within 30 days
• Cash flow timing: You'll pay upfront but get your old escrow back later

14. [Homeowners Insurance](/blog/homeowners-insurance-complete-guide) Escrow: $200-$500

Similar to property taxes—2-3 months upfront.

15. PMI [Prepayment](/blog/heloc-prepayment-penalty): $0-$500

If you still need PMI, you may prepay 2 months.

What Closing Costs Look Like in 2026: Real Examples

Example 1: $250,000 Refinance in Ohio

Lender fees:

• Origination fee: $1,250 (0.5%)
• Application fee: $0 (waived)
• Discount points: $0

Third-party fees:

• Appraisal: $475
• Title search: $275
• Title insurance: $650
• Credit report: $65
• Flood certification: $20

Government fees:

• Recording: $125

Prepaid/Escrow:

• Prepaid interest: $375 (closed mid-month)
• Property tax escrow: $800
• Insurance escrow: $300

Total closing costs: $4,335 (1.73% of loan amount)

Example 2: $500,000 Refinance in California

Lender fees:

• Origination fee: $2,500 (0.5%)
• Application fee: $495
• Discount points: $0

Third-party fees:

• Appraisal: $650
• Title search: $350
• Title insurance: $1,450
• Credit report: $75
• Flood certification: $25

Government fees:

• Recording: $225

Prepaid/Escrow:

• Prepaid interest: $750
• Property tax escrow: $2,200
• Insurance escrow: $450

Total closing costs: $9,170 (1.83% of loan amount)

Example 3: $150,000 Refinance in Texas (Online Lender)

Lender fees:

• Origination fee: $0 (online lender)
• Application fee: $0
• Discount points: $0

Third-party fees:

• Appraisal: $425
• Title search: $200
• Title insurance: $850
• Credit report: $50
• Flood certification: $15

Government fees:

• Recording: $75

Prepaid/Escrow:

• Prepaid interest: $225
• Property tax escrow: $600
• Insurance escrow: $200

Total closing costs: $2,640 (1.76% of loan amount)

12 Proven Strategies to Minimize Closing Costs

1. Shop Multiple Lenders (Save: $500-$2,000)

Get Loan Estimates from at least 3-5 lenders. The origination fee alone can vary by $2,000 between lenders for the same loan.

Target lenders:

• Your current lender (may offer loyalty discounts)
• 2-3 online lenders (typically lowest fees)
• 1-2 local credit unions (competitive rates, reasonable fees)
• 1 mortgage broker (access to multiple lenders)

2. Negotiate the Origination Fee (Save: $500-$1,500)

The origination fee is almost always negotiable. Use competing offers as leverage.

Script: "Lender B is offering the same rate with a $1,000 origination fee. Can you match or beat that?"

Many lenders will reduce or eliminate this fee to win your business.

3. Request a Lender Credit (Save: $1,000-$3,000)

Accept a slightly higher interest rate (typically 0.25% higher) in exchange for the lender covering $1,000-$3,000 in closing costs.

When this makes sense:

• You don't have cash for closing costs
• You plan to refinance again within 5 years
• The rate increase is minimal (0.125-0.25%)

Example:

• Option A: 6.0% rate, $5,000 closing costs
• Option B: 6.25% rate, $2,000 closing costs (lender credit of $3,000)

On a $300,000 loan, Option B costs $47/month more but saves $3,000 upfront. Break-even: 64 months.

4. Shop for Title Insurance (Save: $200-$800)

In most states, you can choose your title company. Prices vary significantly.

How to shop:

• Ask your lender for a list of approved title companies
• Call 3-4 companies for quotes
• Ask specifically about refinance discounts (40-60% off if within 10 years)

States where you CANNOT shop: Texas (rates set by state)

5. Ask for Appraisal Waiver (Save: $400-$800)

If you have significant equity (30%+) and your loan is low-risk, you may qualify for an appraisal waiver.

Requirements typically include:

• Loan-to-value ratio below 70%
• Strong credit (720+ FICO)
• Recent property tax assessment
• No recent sales or transfers

Simply ask: "Do I qualify for an appraisal waiver?"

6. Time Your Closing Strategically (Save: $200-$800)

Close at the end of the month to minimize prepaid interest.

Example:

• Close on the 28th: Pay 3 days of prepaid interest
• Close on the 1st: Pay 30 days of prepaid interest

On a $300,000 loan at 6%, that's a $450 difference.

Bonus: Your first payment is due 30+ days after closing, giving you a "payment holiday" of up to 60 days.

7. Review the Loan Estimate Carefully (Save: $300-$1,000)

Lenders sometimes include unnecessary fees:

• "Document preparation fees" (often bogus—already covered in origination)
• "Courier fees" exceeding $50
• "Administrative fees"

Challenge any fee that seems duplicative or excessive.

8. Bring Your Own Survey (Save: $350-$500)

If you have a survey from your original purchase (and it's less than 10 years old), provide it to avoid a new survey fee.

9. Bundle Services (Save: $200-$500)

Some lenders offer discounts for:

• Setting up autopay
• Opening a checking account with them
• Using their preferred title company
• Bundling homeowners insurance

Ask: "What discounts do you offer for bundling services?"

10. Ask for Fee Waivers (Save: $300-$800)

Many lenders will waive certain fees if you simply ask:

• Application fees (commonly waived)
• Processing fees
• Document preparation fees

Script: "I'm comparing offers from multiple lenders. Can you waive the application and processing fees to make your offer more competitive?"

11. Refinance Before Your Loan Matures (Save: Timing Benefit)

Refinancing every 5-7 years (when rates drop significantly) prevents you from paying the high-interest early years of a new 30-year loan.

Better strategy:

• Refinance to a 20-year or 25-year loan
• Keeps your payoff date similar
• Reduces total interest paid over the loan's life

12. Consider No-Closing-Cost Refinance (Save: $0 Upfront)

Roll closing costs into the loan amount or accept a higher rate. This doesn't reduce costs—just defers them.

When this makes sense:

• Limited cash for closing
• Plan to sell or refinance within 3-5 years
• Need to preserve cash reserves

See our detailed guide on no-closing-cost refinancing for more.

Hidden Fees to Watch For

"Junk Fees" That Should Be Challenged

1. Document Preparation Fee: $200-$500 Often duplicates the origination fee. Ask for removal.

2. Courier/Mailing Fee: >$50 Reasonable: $25-$50. Excessive: $100+.

3. Administrative Fee: Any amount Vague and often unnecessary. Challenge it.

4. Email/Fax Fee: Any amount In 2026, charging for email is absurd. Reject immediately.

5. Rate Lock Fee: $200-$500 Should be free for 45-60 days. If charged, negotiate away.

Fees You Cannot Avoid

• Appraisal (unless waived)
• Credit report
• Title insurance and search
• Recording fees
• Flood certification
• Prepaid interest, taxes, insurance (you're paying these regardless)

Understanding the Loan Estimate Form

The Loan Estimate (LE) is standardized by federal law and breaks down costs into three categories:

Section A: Origination Charges

Everything the lender charges directly. This section has the most negotiable fees.

Section B: Services You Cannot Shop For

Includes appraisal, credit report, flood certification. Prices set by lender's vendors.

Section C: Services You Can Shop For

Title insurance, surveys, inspections. Compare with outside providers.

Section E: Taxes and Government Fees

Recording fees, transfer taxes. Non-negotiable.

Section F: Prepaids

Interest, property taxes, insurance. Not negotiable but you can reduce prepaid interest by closing timing.

Section G: Escrow

Deposits for future taxes and insurance.

Section H: Other

Often empty—if not, ask what it includes.

Comparing Loan Estimates: The Right Way

You'll receive Loan Estimates from multiple lenders. Here's how to compare:

Don't just look at:

• Interest rate (APR is more telling)
• Total closing costs (includes non-negotiable prepaid items)

Focus on:

• Section A total (origination charges)
• APR (includes all lender fees)
• Section C prices (your opportunity to shop)
• Monthly payment

Create a comparison spreadsheet:

               Lender A    Lender B    Lender C
Rate           6.00%       6.125%      5.875%
APR            6.15%       6.20%       6.12%
Section A      $2,500      $1,200      $1,800
Monthly Pmt    $1,799      $1,824      $1,778
Total Closing  $5,200      $4,800      $5,400

Lender B has the lowest absolute closing costs, but Lender C has the lowest rate and monthly payment. Lender B's low Section A fees are attractive, but the higher rate costs you more monthly.

State-by-State Variations

Closing costs vary significantly by state:

Highest-cost states (average 2.5-3% of loan amount):

• Hawaii
• New York
• Delaware
• Washington
• Alaska

Lowest-cost states (average 1.5-2%):

• Missouri
• Indiana
• Iowa
• South Dakota
• Nebraska

Why the difference:

• State transfer taxes (Delaware charges 3%+)
• Title insurance regulation (Texas sets rates; Florida is competitive)
• Attorney requirements (New York requires attorney closings)
• Recording fees (vary by county)

Tax Implications of Closing Costs

Deductible in 2026:

• Mortgage interest (up to $750,000 loan principal)
• Discount points (amortized over loan life)
• Property taxes

Not immediately deductible:

• Origination fees
• Title insurance
• Appraisal
• Most other closing costs

Exception: Points on a primary residence purchase are fully deductible in the year paid. On refinances, you must amortize them over the loan's life.

Example:

• Pay $3,000 in points on 30-year refinance
• Annual deduction: $100/year for 30 years

Consult a tax professional for your specific situation.

Frequently Asked Questions

Are closing costs tax-deductible on a refinance?

Partially. Mortgage interest and points (amortized) are deductible. Fees like origination, appraisal, and title insurance are not. Property taxes are deductible regardless. See the tax section above for details.

Can I roll closing costs into my refinance loan?

Yes, with two methods:

1. Increase loan amount: Refinance $250,000 existing loan plus $5,000 costs = $255,000 new loan (requires sufficient equity)
2. Lender credit: Accept higher interest rate; lender covers costs

Rolling costs into the loan means you'll pay interest on them for 15-30 years.

What's the average closing cost percentage in 2026?

Nationally, 2-5% of the loan amount, with 2-3% most common. On a $300,000 loan, expect $6,000-$9,000. Online lenders and credit unions often charge toward the lower end (2-3%), while traditional banks may charge more (3-5%).

When do I pay closing costs?

At closing, via wire transfer or certified check. You'll receive the final Closing Disclosure 3 business days before closing showing the exact amount due. Never bring cash or personal checks—wire or certified funds only.

Can I negotiate closing costs after receiving the Loan Estimate?

Yes! The Loan Estimate is not final. You can negotiate any fees in Section A (origination charges) and shop for better prices in Section C (title, survey, inspection). The lender must provide a revised Loan Estimate reflecting any changes.

What's the difference between closing costs and prepaids?

Closing costs: One-time fees for processing the loan (origination, appraisal, title, etc.). These are transaction costs.

Prepaids: Ongoing costs you pay in advance (interest, property taxes, insurance). You'd pay these anyway—you're just prepaying them.

Total cash to close includes both.

Do I get my old escrow account back?

Yes. Your old lender must refund your existing escrow balance within 20 business days of payoff. This typically arrives 3-4 weeks after your refinance closes. Budget accordingly—you'll fund a new escrow upfront, then receive your old one back later.

Can I get a refund if I cancel before closing?

Depends on timing and fees paid:

• Before application: Full refund (if any fees paid)
• After application, before appraisal: Typically refund minus credit report fee ($50-75)
• After appraisal: May lose appraisal fee ($400-800)
• After underwriting: May lose appraisal and credit report fees

Most other fees aren't paid until closing. Read your application agreement for specific terms.

How much are closing costs on a $200,000 refinance?

Typically $4,000-$6,000 (2-3%), including:

• Origination: $1,000-$2,000
• Appraisal: $400-600
• Title: $800-1,200
• Other fees: $500-800
• Prepaids: $1,000-1,500

Varies by location, lender, and whether you buy points.

Are closing costs higher for [cash-out refinance](/blog/cash-out-refinance-guide)?

Often yes, by $500-$1,500. Reasons:

• Higher interest rate (0.25-0.5% increase)
• More stringent appraisal (may cost more)
• Additional underwriting (higher risk)
• Larger loan amount (percentage-based fees increase)

The rate difference alone can significantly impact long-term costs.

Your Closing Cost Action Plan

30 days before refinancing:

• Request Loan Estimates from 3-5 lenders
• Create comparison spreadsheet
• Identify negotiable fees
• Check for refinance title insurance discounts

2 weeks before closing:

• Finalize lender choice
• Negotiate Section A fees
• Shop for Section C services (title, survey)
• Calculate optimal closing date (end of month)

3 days before closing:

• Review Closing Disclosure
• Verify all numbers match Loan Estimate
• Challenge any unexpected fees
• Arrange wire transfer or certified check

At closing:

• Bring photo ID
• Review all documents
• Ask about anything unclear
• Get copies of everything

Closing costs don't have to be a mystery or a budget-buster. With preparation, negotiation, and strategic timing, you can reduce your costs by thousands while still securing the refinancing benefits you need. Shop smart, challenge fees, and never accept the first offer you receive.

Related Articles

• Property Taxes Explained: How They Work and How to Reduce Them
• Cash-Out Refinance: Complete Guide for 2026
• How to Challenge Your Property Tax Assessment (And Win)