How much does it cost to refinance a mortgage?

Refinancing your mortgage costs money upfront — typically 2% to 5% of your new loan amount, or $6,000 to $15,000 on a $300,000 balance. But if you locked in a rate above 7% between 2022 and 2025, staying put is costing you $200 to $400 a month, according to Bankrate’s Hidden Homeownership Tax research. That’s the actual comparison: a one-time bill against a bill that never stops.

“Homeowners who locked in mortgage rates during the rate peak have likely been waiting for a chance to refinance,” says Linda Bell, lead insights analyst at Bankrate. “If current rates offer you meaningful savings, don’t let closing costs scare you away. The key is making sure you’ll stay in the home long enough for those upfront costs to pay for themselves. It’s really a numbers game.”

Calculate your break-even point

If you’re refinancing to lower your monthly payment, it’s essential to figure out your break-even point — that is, the point at which your savings outweigh your closing costs.

Divide your total refinancing cost by your estimated monthly savings to get your break-even timeframe. Here’s how that plays out on a $400,000 loan moving from a 7.5% rate to a 30-year refinance rate of 6.5%:

In this example, it will take 30 months, or 2.5 years, to realize the savings, or as long as six years if your closing costs are higher. If you don’t plan to sell or refinance in that time, it could be worth it to refinance now. If you expect to sell before your break-even point, refinancing isn’t the right move — you won’t recoup what you paid.

Mortgage refinance calculator

Run your own numbers with our mortgage refinance calculator to see your break-even point before you commit.

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How much does it cost to refinance?

Refinancing your mortgage doesn’t come free. When you replace your current home loan with a new one, you’ll typically pay closing costs, much as you probably did when you first bought your home. Here’s what you’ll pay, and how to tell if it’s worth it.

Closing costs

Your refinance closing costs vary by the size of your loan and where you live, but generally, you can expect to pay between 2% and 5% of the new loan balance. For example, if you’re refinancing a $150,000 balance, you might pay between $3,000 and $7,500 in closing costs. Here’s a breakdown of common closing costs:

Interest and other loan fees

In addition to your closing costs, there may be other interest-related fees. A common one is prepaid interest, which is the amount of interest that accrues between the day your loan funds and the end of the month. That amount will depend on your loan balance and interest rate. 

You may also choose to pay discount points, which are optional upfront fees that lower your interest rate. A single discount point typically costs 1% of your loan amount, and lowers your interest rate by roughly 0.25%. On a $400,000 refinance, one point would cost $4,000 upfront and could take your rate from 6.75% to about 6.50% — worth it only if you stay in the home long enough for the lower monthly payment to recoup that $4,000.

Another potential charge is a rate lock fee for extending your rate lock period, and you may also incur lender-specific administrative fees. In some cases, if you refinance into a conventional loan with less than 20% equity, you may need to pay private mortgage insurance (PMI).

Mortgage rate variables

Along with closing costs, refinancing means you’ll begin paying a new mortgage with a new interest rate. This rate depends on many variables, including your:

• Credit score: 670 to 739 is considered good; 740 to 799 is very good; 800 and above is exceptional. The higher your score, the better your rate. Mortgage lenders typically reserve their lowest rates for borrowers with scores above 780.
• Lender: Lenders have different approaches to pricing loans and underwriting, which influence your rate.
• Type of refinance: You’ll typically pay a higher rate on a cash-out refinance than you will on a standard refinance, where you’re simply changing the interest rate and the loan term.
• Loan size and term: The smaller your loan and the shorter the term, the better your rate will generally be.
• Property type: If you’re refinancing a primary residence, you’ll typically receive a lower rate than you would if refinancing an investment property.

Current refinance interest rates

The average homeowner leaves thousands on the table by not comparing rates. Compare refinance offers and see what you could actually save before you commit.

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How much does it cost to refinance government-backed loans?

Government-backed loans, including FHA, VA and USDA loans, all offer “streamline” refinance options for qualifying borrowers that may cost less than a typical refinance. Streamline refinances have fewer hoops to jump through. For example, you may not need a credit check or an appraisal.

To qualify for this option, you can’t use the refinance to pull cash out of your home’s equity.

On the other hand, government-backed loans come with their own fees. For instance, VA loans require a funding fee when you refinance, and FHA loans may require mortgage insurance premiums (MIP).

Remember that while the government backs such loans, private lenders originate them, so shopping around still matters. Bankrate’s Hidden Homeownership Tax research found that 81% of VA borrowers overpay on their home loans. If you have a VA loan, ask specifically about a VA Interest Rate Reduction Refinance Loan, or IRRRL — the streamline option built for VA borrowers — and compare at least two lenders before signing.

How to lower the cost to refinance

If you’re refinancing to lower your monthly payment, paying less to refinance helps you realize those savings more quickly. Here are six ways to reduce your refinance costs.

1. Boost your credit score

Just as first mortgages have credit score requirements, you’ll need to meet credit score minimums to refinance, too. The better your credit, the lower your refinance rate. You can boost your credit by paying off debt, among other strategies. You’ll unlock access to the lowest rates with a credit score above 780.

2. Compare mortgage offers and rates

To score the best possible rate, compare at least three mortgage refinance lenders using the APR (annual percentage rate), the number that includes both interest and fees, so it reflects the true cost of the loan. Skipping this step is common: 78.7% of refinance borrowers overpaid in 2025, according to Bankrate’s Hidden Homeownership Tax research. Always get a quote from your existing lender, too — you might qualify for a lower-cost refinance or other repeat-customer benefits.

3. Negotiate closing costs

As with your first mortgage, look closely at the loan estimate from your lender. You might save money by negotiating closing costs, especially if you’ve shopped around and have more than one refinance offer. You can also use other quotes to check for unusually high fees.

4. Ask for fee waivers

Ask your bank or lender whether it will waive or reduce the application or credit check fee, especially if you’re an existing customer. You may also be able to skip a new home appraisal or property survey if you’ve recently had one done.

5. Choose your original title insurer

In many states, title rates are regulated, but it may cost less for your title insurance company to reissue your policy for your refinanced loan than it would to start over with a new company or policy.

6. Think twice about a no-closing-cost refinance

A no-closing-cost refinance doesn’t eliminate your closing costs — it moves them into a higher interest rate or a larger loan balance. You’ll pay more over time and take longer to break even, so this only makes sense if you’re short on cash now and plan to refinance or sell again soon.

Frequently asked questions

• How does refinancing your mortgage work?

  When you refinance your mortgage, you take out a new mortgage with a different interest rate and potentially a different loan term, sometimes from a new lender. The new mortgage pays off your original loan.

• Will your monthly payments decrease when you refinance?

  If you refinance to a lower rate with the same loan term, your payment will go down. If you refinance to a shorter term, your payment could go up even at a lower rate, because you’re paying off the balance faster.