Your refinance cost depends on the loan, property and lender. Use a written Loan Estimate to separate loan fees from prepaid expenses and escrow deposits, then calculate whether the savings justify the cost.
Identify the charges that pay for the new loan
Refinancing can involve origination or underwriting charges, an appraisal, credit-report charges, title work, settlement services and recording charges. Not every transaction includes every item. Optional discount points are another cost if you choose to pay upfront for a lower rate.
Avoid relying on a single percentage of the loan amount as your budget. A property’s location and transaction details can change the final bill. Request itemized figures before deciding whether the refinance is affordable.
Cash to close is not the same as the cost of borrowing
Prepaid interest, insurance payments and funds deposited into a new escrow account can affect the cash you need at closing. These are different from lender origination charges, although they still matter to your immediate budget.
Ask how your existing escrow account will be handled after payoff. Do not assume an expected refund is available to pay for the new closing. Compare the timing of deposits, refunds and your next mortgage payment.
Compare costs on equal terms
Request estimates based on the same loan amount, term and rate-lock assumptions. A quote with points and another with lender credits are not equivalent even when their rates look similar. Some charges can be shopped for; the Loan Estimate identifies the applicable services.
For a Queens or Long Island property, ask the settlement professional for property-specific recording, title and any applicable mortgage-tax figures. Whether a New York consolidation, extension and modification agreement is possible—and whether it actually reduces costs—requires lender and legal review.
Decide how the costs will be paid
Paying fees upfront uses savings now. Financing permitted fees increases the balance and may mean paying interest on those costs. A lender credit may reduce cash due but often comes with a higher rate. Compare total costs over your expected ownership period, not only the closing-day bill.
- Itemized lender and settlement fees
- Points and lender credits
- Prepaids and escrow funds
- New balance if costs are financed
- Expected savings before selling or refinancing again
Sources & further reading
- CFPB: Should I refinance?
- Federal Reserve: A Consumer’s Guide to Mortgage Refinancings (historical educational guidance)
General educational information, not a loan offer or individualized financial, tax or legal advice. Examples are hypothetical. Programs, eligibility, costs and terms vary; approval and savings are not guaranteed. Confirm current requirements with the lender and appropriate advisers.