How to lower the cost of refinancing

Some homeowners put off refinancing their current mortgages because refinancing costs money. For some borrowers, saving $100 or $150 a month won’t justify parting with thousands of dollars in cash upfront. But you can negotiate some refinance closing costs, especially the lender’s own fees. Other steps can also lower the cost of refinancing and save you money upfront and in the long run. 

Click to see current refinance rates

7 tips to lower refinance costs

Following these tips could trim the cost of your refinance, saving you a lot of money moving forward. These tips include ways to lower your refinance rate and your closing costs.

1. Shop around for mortgage lenders

Mortgage refinance lenders compete for your business just like grocery stores and restaurants. 

So you should always check with several lenders to make sure you are getting the lowest rates and fees possible. 

It’s not enough to compare lenders’ advertised rates, since they won’t apply to your unique personal finances. Instead, you’ll need to start the application process and analyze loan estimates from each lender you’re considering. 

Compare rates, but also be sure to compare lender fees, which contribute a lot to closing costs.

2. Negotiate lower closing costs and a lower interest rate

Some closing fees are non-negotiable, but others can be changed. Loan origination fees, for example, are typically 0.5% to 1% of the loan amount, according to Freddie Mac’s 2026 guidance. If you’re being charged 1% or more, why not ask your loan officer to lower the fee?

Or, if you’ve accepted a higher loan origination fee, ask your lender to waive the application fee or the processing fee.

You can also negotiate for a lower interest rate, especially if you have another offer from a different lender that’s willing to go lower. Show this offer to the other lenders you’re considering.

Your type of loan will influence how much you can negotiate on refinance closing costs. With a VA loan, for example, VA rules cap the lender’s flat origination charge at 1% of the loan amount. Your lender may not be willing to go lower.

3. Keep the same title insurance company

Your new lender will usually require a title search and a new lender’s title insurance policy. Ask the company that issued your current policy whether you qualify for a reissue or refinance discount on the new one.

This can help keep your refinance costs low, though discounts vary by state and company. The fee will cover the cost of searching the property’s records to make sure you are the owner and to check if anyone has put a lien against your home.

4. Ask for a no closing cost refinance 

A mortgage refinance will always cost money. When mortgage lenders advertise no-closing cost loans, you’ll still be paying closing costs in the form of a higher interest rate.

But if you’re strapped for upfront cash, this may be just the deal you need. Whether you still save long-term depends on how far your new rate, with closing costs factored in, falls below your current rate.

Some lenders will also roll closing costs onto your new loan balance. This will increase your principal, and you’ll need enough home equity to absorb the higher loan amount.

Click to check today’s refinance rates

5. Double check with your current lender

Before you commit to a new lender, see if your current lender will be willing to offer lower rates and fees.  

Lenders compete for your business. To keep you as a customer, your current mortgage lender may be willing to beat the best mortgage rate you’ve gotten from a different lender.

Or, your current lender may be willing to waive some of its fees to keep your business. It never hurts to ask. 

6. Consider a streamline refinance program

Streamline refinance loan programs let you refinance, usually into a lower rate, with less paperwork.

This won’t work with a conventional loan. But if you have a government-backed mortgage (like an FHA, USDA or VA loan), be sure to ask your current lender about a streamline refi.

In many cases, you won’t need a new home appraisal or a credit check. This saves money on your closing costs. (No appraisal means no appraisal fee, for example.)

You couldn’t get a cash-out refinance. Streamline refinances will also work only on the same type of loan. For instance, an FHA streamline won’t work on a VA loan and vice versa.

If you do have a conventional loan, check out Freddie Mac’s Refi Possible or Fannie Mae’s RefiNow programs which could save on closing costs.   

7. Work on your credit first

One of the best ways to save on your refinance is by raising your credit score. The higher your credit score, the lower the mortgage rates you’ll be offered on a refinance.

Since homeowners looking to refinance have already been making their mortgage payments, there’s a chance their credit history has improved over the years.

Your credit report won’t directly affect refinance closing costs, but a higher score could give you more power to negotiate. 

For example, if your credit history justifies a lower interest rate, you’ll have more room to raise your rate to cover closing costs.

Check your refinance eligibility. Start here

Which refinance closing costs can be negotiated?

Some borrowers think of “closing costs” as a single expense. 

In reality, closing costs are a collection of charges covering the variety of professional services needed to close a home loan.

Looking at these charges individually will help you learn how to negotiate lower refinance closing costs. 

Refinance fees by type

• Lender’s fees (negotiable): These are administrative costs charged by your lender. They usually include a loan origination fee that’s based on the size of your loan but can also include processing fees, underwriting fees, rate lock fees, and even application fees. You can negotiate these fees with many lenders.
• Third-party fees (harder to negotiate): Your lender passes these fees on to you but they’re actually charged by third parties such as the home appraiser, credit bureaus, and escrow company. It’s hard to negotiate these fees, but you could choose a less expensive service provider in many cases.
• Legal fees (harder to negotiate): An attorney can help make your real estate transaction legally binding through a title search and by recording the deed properly with your local government. You can compare attorneys in search of the best deal or ask your real estate agent or loan officer for suggestions.
• Front-loaded charges (non-negotiable): Depending on when you close your loan, you could owe property taxes or homeowners insurance premiums in advance. You can’t negotiate these costs, but they balance out eventually. Chances are you already have enough saved in your current lender’s escrow account and will be reimbursed after closing.
• Mortgage insurance and program fees (non-negotiable): Depending on your type of loan, you may owe an upfront fee set by the loan program: a 1.75% upfront mortgage insurance premium on FHA loans, a 1% upfront guarantee fee on USDA loans, or a VA funding fee on VA loans. Conventional loans do not require upfront mortgage insurance.
• Optional charges: You could buy discount points to lower your mortgage rate. You could also get owner’s title insurance to protect your investment if a company or individual claims ownership of your home later. These closing costs aren’t required but you may need them.

Total refinance closing costs by loan size

All in all, Freddie Mac’s 2026 guidance says to expect refinance costs of 3% to 6% of your loan principal. They tend to reach a higher percentage of smaller loan amounts but a lower percentage of larger loan amounts. 

Two strategies for saving on a refinance loan

Costs for refinancing fall into two broad categories:

• Your refinance rate: The amount you’ll pay in interest over the life of the loan
• Your upfront costs: The amount you’ll pay upfront to close on the loan

These two broad categories can be interrelated, especially if you’re going with a no-closing cost loan. But it’s important to consider them separately when you’re looking for ways to save. 

Negotiate a lower refinance rate

Many first-time mortgage applicants don’t know they can negotiate interest rates with their lenders. 

You’ll have more negotiating power when you have a strong credit history, plenty of home equity, and the ability to go with a shorter loan term.

But it’s most important to shop around among several different lenders. If you get a lower rate quote from one lender, show it to the other lenders you’re considering. One of them may be willing to beat your best mortgage rate offer.

Even if you plan to accept a higher interest rate in exchange for lender credits to cover closing costs, you should still negotiate for your best mortgage rate first.    

How to reduce closing costs

You can also reduce refinance closing costs when you negotiate with lenders and compare their offers.

Lenders can lower their loan origination and other lender fees. These fees cover overhead costs, so you shouldn’t expect a lender or mortgage broker to waive its fees completely. 

But you can make a case for paying less, especially when you’re taking out a larger loan amount. That’s especially true when you’re holding a lower fee quote from another lender.

Some closing costs pass through the lender: the home appraisal fee, for example, which is charged by a third-party home appraiser. 

A lender typically won’t lower this fee since it’s simply covering its costs. But you can ask for a different appraiser in advance if you can find one with a lower appraisal fee. 

If you do need to accept a higher rate so the lender will cover some or all of your closing costs, you should still try to negotiate for lower fees. 

How to lower refinance costs FAQs

Can you negotiate refinance rates?

Yes, you can negotiate refinance rates, especially when you have a strong credit profile and more than 20% in home equity. (You may have this much equity if you made a large down payment and have had your loan for a few years.) Comparing rate quotes from at least three different lenders will improve your chances. Lowering your rate will lower the monthly payment on your mortgage loan.  

Are refinance closing costs negotiable?

Some refinance costs are negotiable, especially fees charged directly by the lender. Your loan origination fee, for example, is typically 0.5% to 1% of the loan amount, according to Freddie Mac’s 2026 guidance. On a $250,000 loan, that’s $1,250 to $2,500. If your lender is charging 1%, asking for 0.5% could save $1,250 on borrowing costs. You could also ask your lender to lower your underwriting or processing fee.  

What mortgage refinance fees are negotiable?

Among refinance closing costs, fees lenders charge directly will be easier to negotiate than third-party fees. Lender fees include the loan origination fee and underwriting fee. Third-party fees include the appraiser’s fee and the credit report fee. Other costs, such as upfront mortgage insurance, VA funding or USDA guarantee fees, or prepaid property taxes, are not negotiable.

How can I lower the cost of refinancing?

You can lower the cost of refinancing by shopping around for the best mortgage rate and lowest fees. Even with FHA loans, which the Federal Housing Administration insures, lenders may have some room to lower fees and rates.  

What are typical closing costs on a refinance?

Typical closing costs for most refinance options resemble costs homebuyers pay on a new mortgage. They include lender fees, legal fees, charges for third-party services such as the home appraisal, and prepaid deposits for property taxes and homeowners insurance. Freddie Mac says to expect a total of 3% to 6% of the loan principal.  

Can you avoid closing costs when refinancing?

You could avoid paying closing costs out of pocket, but you’ll still be paying them in the form of a higher interest rate. This doesn’t mean you couldn’t still save on your monthly mortgage payments with a no-closing cost refinance. But you would be cutting into your potential savings. Depending on how long you keep the loan, you could pay more in extra interest than you would have paid in cash upfront. A refinance calculator can help you see whether avoiding upfront closing costs is a good idea for you.

Is a refinance worth the closing costs?

Refinancing is worth the closing costs when you stay in the new loan long enough to benefit from its lower interest rate. Refinancing can also pay off by eliminating an FHA loan’s ongoing mortgage insurance or by shortening the mortgage term from 30 to 20 or 15 years. A shorter mortgage term increases monthly payments but can save on long-term interest.  

How much are closing costs on a refinance?

Freddie Mac’s 2026 estimate for refinance costs is 3% to 6% of the loan principal. This percentage tends to skew lower for larger loan sizes but higher for smaller loan amounts. For example, a $125,000 refinance at 6% would cost $7,500, while a $500,000 refinance at 3% would cost $15,000. 

Do you have to pay closing costs when you refinance?

Yes, any new mortgage loan requires closing costs. A streamline refinance option normally costs less in closing costs because it’s a low-documentation loan. You may not need a credit check or a home appraisal. Streamline refis work only for the same loan type you already have and only for government-backed loans. 

Check current rates

While there are many reasons to refinance a mortgage, the best reason is usually that you can get a lower rate than the one you have now. A bigger gap between your current rate and a new rate increases long-term savings and can make paying upfront closing costs less painful.

Finding out the rates that are available to you is a great first step in deciding if now is the right time to refinance.

Check current mortgage interest rates. Start here