How Much for That Refinance?

With mortgage interest rates being higher than 2020 and 2021 levels, some home buyers are opting to purchase now and refinance later.  Some lenders may offer “no-closing-cost” or “low-closing-cost” refinancing options. This is done by the lender rolling the costs into the loan or by the lender or broker absorbing some or all of the closing costs by charging a higher interest rate.

Fee Associated with A Refinance

Application Fees: Lenders may charge an application fee to process your refinance application. This fee can range from a few hundred dollars to several thousand dollars.

Origination Fees: These fees cover the lender’s administrative costs for processing and funding the loan. Origination fees are typically a percentage of the loan amount and can range from 0.5% to 1.5% of the loan.

Appraisal Fee: To determine the current value of your home, lenders usually require an appraisal. The appraisal fee can range from a few hundred to a few thousand dollars, depending on the size and complexity of the property. However, there are some refinances (i.e., “Streamline”) that don’t require appraisals.

Title Search and Insurance: Lenders typically require a title search to ensure there are no issues with the property’s ownership. Additionally, they may require title insurance to protect against any unforeseen title problems. These costs can vary but are usually a few hundred dollars.

Credit Report Fee: Lenders will obtain your credit report to assess your creditworthiness. The fee for pulling your credit report is typically around $40 to $75.  However, there are some refinances (i.e., “Streamline”) that don’t require FICO score credit reports.

Closing Costs: The same as when you initially purchased your home, a refinance will involve closing costs. These costs may include attorney fees, recording fees, and other miscellaneous charges. Closing costs can vary significantly but are generally in the range of 2% to 5% of the loan amount.

Reach out to a lender you’re comfortable with and request a loan estimate or at minimum an Initial Fee worksheet (IFW) to get an accurate estimate of the costs associated with refinancing.