refinance closing costs explained simply

What they are

When you refinance, you’ll pay a bundle of fees known as closing costs, typically around 2%–5% of the loan amount. They usually include an appraisal, title insurance, lender underwriting and processing, credit reports, recording charges, and any discount points you choose to buy for a lower rate.

What to watch

Ask for a Loan Estimate from each lender and compare line items, not just the advertised rate. Some costs are third‑party and fairly fixed; others are negotiable or offset by lender credits. A “no‑closing‑cost” refi often means a higher rate that bakes fees into the deal.

Deciding if it’s worth it

Estimate your break‑even: divide total fees by the monthly savings to see how long it takes to come out ahead. Factor in how long you’ll keep the home, taxes, and whether rolling costs into the loan makes sense given your goals.

• Shop multiple quotes on the same day
• Ask about appraisal waivers or re‑use
• Watch prepayment penalties and escrow changes
• Time your rate lock to market moves
• Confirm the payoff amount and per‑diem interest