Nobody likes to pay closing costs, but you’ll likely face some as part of your mortgage refinance, also known as mortgage refinance closing costs.
You might want to refinance your home for various reasons, such as tapping into your cash equity, easing financial strain, or lowering your private mortgage insurance costs.

However, mortgage refinance fees could cost up to 5% of your principal. It’s not an enormous charge, but it’ll add up over time. It is important to know what closing costs to expect when refinancing.

What Are the Typical Mortgage Refinance Costs?

Though there are various expenses and fees that you will have to pay when you go through a mortgage refinance, you could find a better deal if you do research and compare the market to avoid mortgage refinance scams.

Here are some of the most common refinance closing costs:

1. Loan Origination Fee

You’ll have to pay an origination fee to your lender for processing and preparing your loan. The origination fee essentially covers the customer service provided by the lender.

You can negotiate all loan origination fees. Don’t be afraid to negotiate these costs with your lender because you might save a considerable sum. Some lenders may be willing to negate the origination fee altogether.

2. The Appraisal Fee

You will get an appraisal before you buy your home for the following reasons:

To ensure there are zero hidden problems

To make sure you’re getting the best deal

To prove the home’s value to the lender

3. Mortgage Insurance and Title Fees

You’ll need to buy new title insurance when you complete a mortgage refinance. Can you get title insurance credit on a refinance? It’s possible if you purchased the policy less than three years ago.

You will also have to pay for mortgage insurance if you have a government-backed mortgage such as an FHA or VA loan.

4. VA Funding Fee

If you’re refinancing a VA loan, you will have to pay a percentage of the loan to the Department of Veteran Affairs. The amount that you pay depends on the type of refinancing you choose.

Various people are exempt from the VA funding fee, including:

Anyone receiving VA disability

Surviving spouses that receive Dependency Indemnity Compensation

Purpleheart recipients that are on active duty

Other Typical Closing Costs to Watch Out for

Early repayment fees –Although prepayment penalties don’t occur every day, they’re often applicable within the first three to five years of your mortgage. FHA loans and VA loans rarely include prepayment fees because they’re government-backed loans.

Discount points – If you can’t avoid them, try to calculate how much they will cost you to see if refinancing is still worthwhile. You can use a mortgage discount points calculator to help you.

Credit report fee – Lenders will need to conduct a new credit check, and they’ll likely charge a closing fee for it. Credit reports cost between $25 to $50.

Higher loan balance – Make sure you’re confident you can repay a higher loan balance if you choose to roll in your closing costs.

Final Thoughts

Facing closing costs can be frustrating for any borrower. You should ensure you can afford to cover all the closing costs. If not, you should consider whether a mortgage refinance is the best option for you.

To learn more about closing costs, visit:

Mortgage Refinance Closing Costs: What You Need to Know

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Disclaimer: This video is for educational purposes only and serves to share an opinion, with no guarantee of gains or losses on investments. WealthyMillionaire is not a financial adviser. Investing is risky, and your investments are your responsibility alone. Always consult with a professional financial advisor before implementing any of the strategies shared in this video

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