Cost to Refinance a Mortgage
The national average refinance costs several thousand dollars, but your bill depends on loan size, location, and how hard you shop. Here are realistic numbers and the levers that move them.
Refinancing a $300,000 mortgage typically costs $6,000 to $15,000 at closing. Bigger loans cost more in absolute dollars but less as a percentage. Shopping three lenders, negotiating origination, and choosing whether to pay points are the biggest levers on your total.
Realistic cost numbers
On a $300,000 refinance, 2 to 5 percent means $6,000 to $15,000 at closing. A $200,000 loan might run $4,000 to $10,000, while a $600,000 loan runs $12,000 to $30,000. Fixed third-party fees like appraisals do not scale with loan size, so smaller loans pay a higher percentage.
Remember that cash to close exceeds true costs: prepaid interest and escrow deposits inflate the closing-day number but are not lender profit. When comparing quotes, compare the same sections of the loan estimate, and treat lender credits as what they are, a higher rate in disguise.
Points: when buying down the rate pays
One discount point costs 1 percent of the loan and typically cuts the rate by about 0.25 points. On a $300,000 loan, one point is $3,000 for roughly 0.25 percent off the rate.
Points pay off only if you keep the loan long enough for the monthly savings to repay the upfront cost, which is a second breakeven inside your refinance. As a rough guide, points make sense when you will stay 7-plus years and look expensive when you might move in three. Run the breakeven with and without points before deciding.
The hidden costs people miss
Extending the term is the biggest hidden cost: dropping from 25 years remaining to a new 30-year loan can add tens of thousands in lifetime interest even as the payment falls. Opportunity cost matters too: $8,000 in closing costs invested instead would compound for decades.
There is also the reset effect: early mortgage payments are mostly interest, so refinancing repeatedly keeps you in the interest-heavy years forever. And if your home appraises low, you may face PMI or a smaller loan than planned. Get the appraisal reality check early.
Skip the arithmetic
See what the costs do to your breakeven in the free refinance calculator.
Refinance cost questions
Is it worth paying points on a refinance?
Calculate a separate breakeven: points cost divided by the monthly savings the lower rate creates. If that breakeven is 80 months and you might move in 48, skip the points. Points also lose value if you refinance again later, since you paid for a rate you then abandoned.
Why do refinance costs vary so much by lender?
One lender charges a 1 percent origination fee with a low rate; another charges no origination with a rate 0.25 higher. Neither is automatically better; the loan estimate lets you compare the true three-year and lifetime costs. This is why same-day quotes from three lenders beat any advertised rate.