Refinancing Tips · April 21, 2025
Refinance Closing Costs: What You Will Pay in 2025
Refinancing costs money upfront. Here is a complete breakdown of refinance closing costs in 2025 and proven strategies to reduce what you pay.
Refinance closing costs typically run 2-3% of the loan amount. On a $300,000 refinance, expect $6,000-$9,000 in closing costs.
Lender Fees
Origination fee: 0-1.5% of loan amount (compensation for creating the loan). Underwriting fee: $400-$1,000. Processing fee: $300-$700 (some lenders include in origination).
Third-Party Fees
Appraisal: $400-$700 (waived on FHA Streamline and VA IRRRL). Title insurance (lender's policy): $400-$800 (required on most refinances). Title search: $200-$400. Recording fees: $50-$250. Attorney fees (required in some states): $500-$1,000.
Prepaid Items
Prepaid interest: from closing date to end of month. This is typically 1-15 days of interest. Closing in the last week of the month minimizes this cost. Escrow reset: if rolling escrow into the new loan, you may need to fund a new escrow account. Your existing escrow balance is refunded within 30 days of closing.
How to Reduce Closing Costs
No-closing-cost refinance: The lender covers costs in exchange for a slightly higher rate. This makes sense when you might refinance again or sell within 3-5 years.
Lender credits: Similar to no-closing-cost — you accept a higher rate in exchange for credits at closing.
Negotiate the origination fee: On large loans, brokers sometimes negotiate lower compensation.
Shop title services: You can choose your title company for a refinance — get competing quotes.
Close at end of month: Minimizes prepaid interest.
HMS provides a complete cost analysis before you commit. Call 309-222-8286.