Refinancing your mortgage can be one of the smartest ways to lower your monthly payment, access home equity, or change your loan terms – but how much does it actually cost?
The answer depends on your loan type, financial goals, and your lender. On average, refinancing costs 2% to 6% of your loan amount, which can translate to thousands of dollars in closing costs.
At JVM Lending, we help borrowers understand these costs upfront – and for clients who purchased their home through JVM, our exclusive Rate Drop Free-fi™ Program allows them to refinance later with no fees when rates drop.
In this guide, we’ll break down the real costs of refinancing, what impacts those costs, and how to know when a refinance makes financial sense.
What Are The Typical Costs To Refinance A Mortgage?
When you refinance, you’re essentially taking out a new mortgage to pay off your existing one. Just like your initial home purchase, that process comes with closing costs, which typically range between 2% and 6% of your loan amount.
For example, refinancing a $400,000 loan could cost between $8,000 and $24,000 in total fees, depending on your loan type and location.
Common Refinance Fees
Here are the most typical costs associated with refinancing:
- Origination Fee: Covers lender processing and underwriting (usually 0.5%–1% of the loan amount).
- Appraisal Fee: Determines your home’s current market value. Required for most refinances except certain streamlined FHA or VA programs.
- Title Fees and Insurance: Protect against ownership disputes and ensure title transfer.
- Credit Report Fee: Covers pulling your updated credit file.
- Recording Fees: Charged by your county to update public ownership records.
- Escrow & Prepaids: May include property taxes and homeowners insurance collected upfront.
While these fees vary, most borrowers will pay between 2% and 6% of the total loan amount when refinancing.
How to Pay (or Avoid) Refinance Closing Costs
There are several ways homeowners choose to handle refinance costs:
- Pay Out-of-Pocket: The most straightforward option.
- Roll the Costs Into the Loan: Increases the loan balance slightly but spreads the cost over time.
- No-Cost Refinance: The lender covers costs in exchange for a slightly higher interest rate.
Each option affects your rate and long-term savings differently. At JVM Lending, we walk you through each scenario to find the most cost-effective structure based on your goals and timeline.
Are Cash-Out Refinances More Expensive?
A cash-out refinance allows homeowners to tap into their equity for major expenses such as renovations, tuition, or debt consolidation. Because it increases the loan balance, costs can be slightly higher.
Key differences include:
- A new appraisal is required.
- Mortgage insurance may apply (for FHA loans).
- Interest rates can vary slightly depending on market conditions.
Even so, cash-out refinances are often far less expensive than high-interest personal loans or credit cards, and JVM Lending helps structure them strategically to minimize costs.
How Much Can You Really Save by Refinancing?
Your refinance savings depend on three key factors:
- Interest Rate Reduction: Even a 1% rate drop can make a major impact.
- Loan Size: The larger the balance, the bigger the potential savings.
- Time in the Home: The longer you stay, the more you save after covering costs.
Example: Refinancing a $400,000 loan from 6.5% to 5.5% could save about $225 per month, or $27,000 over 10 years.
To calculate your break-even point, divide your total refinance costs by your monthly savings. If it takes three years to break even and you plan to stay longer than that, refinancing may be a sound move.
Can Refinancing Increase Monthly Payments?
It can, depending on your refinance structure.
- Shorter Term (e.g., 15 years): Higher payments but lower total interest over time.
- Cash-Out Refinance: Larger balance, potentially higher payments.
- Lower Rate or Longer Term: Usually reduces payments immediately.
A JVM advisor can model all scenarios to help you choose the structure that best balances monthly affordability with long-term savings.
When Is The Right Time To Refinance?
You may want to consider refinancing if:
- Rates have dropped since your current loan originated.
- Your credit or home value has improved.
- You want to remove mortgage insurance or access home equity.
If you purchased your home with JVM Lending, our Rate Drop Free-fi allows you to refinance with us again later, for free, whenever rates improve.
Otherwise, JVM’s advisors can help you evaluate costs, timing, and potential savings to decide whether refinancing makes financial sense right now.
What Is JVM’s Rate Drop Free-fi™ and How Does It Work?
JVM’s Rate Drop Free-fi™ Program is an exclusive refinance benefit for clients who purchased their home through JVM.
When rates drop, eligible JVM clients can refinance through JVM Lending with no lender fees, meaning no application, underwriting, or processing fees, and often no appraisal fee.
The Rate Drop Free-fi™ Program makes future refinancing easier and more affordable for JVM homebuyers, giving them the flexibility to take advantage of better market conditions without worrying about out-of-pocket refinance fees.
That means:
- No application fee
- No underwriting or processing fees
- No appraisal fee (in most cases)
- No pressure to wait for the “perfect” rate
If you financed your home purchase with JVM Lending after October 2022, you automatically qualify for the Rate Drop Free-fi™ Program when interest rates drop. It’s our way of ensuring clients can take advantage of future savings without worrying about refinance costs.
Frequently Asked Questions
How much does it cost to refinance a mortgage?
Most refinances cost between 2% and 6% of your loan amount. This includes fees like origination, appraisal, and title charges.
What is the JVM Free-fi Program?
JVM’s Rate Drop Free-fi™ Program is an exclusive refinance benefit that waives most or all lender fees, including application, processing, and underwriting. To qualify for the program, you must first purchase your home with JVM Lending. You can see more information and eligibility details about the program here.
Can I refinance if I didn’t buy my home with JVM?
Yes! JVM Lending can still help you refinance, but the Free-fi benefit applies only to clients who originally purchased their home with JVM.
Does my credit score matter when refinancing?
Yes, your credit score plays a major role in determining your refinance eligibility and interest rate. Borrowers with higher credit scores typically qualify for lower rates and better loan terms, while lower scores may result in higher costs or limited options.
To improve your credit before refinancing, consider:
- Paying down revolving balances to reduce your debt-to-income ratio.
- Reviewing your credit report for errors and disputing any inaccuracies.
- Avoiding new credit inquiries or large purchases prior to applying.
Even if your credit isn’t perfect, we can help you find refinance options that fit your situation and guide you on improving your profile for future savings.
Does refinancing always lower your payment?
Not always. If you shorten your term or take out cash, payments may rise, but your total interest paid usually decreases.
Can I refinance an FHA or VA loan?
Yes, both FHA and VA loans can be refinanced, and often more easily than conventional loans.
- FHA Streamline Refinance: Simplifies paperwork and waives the appraisal, though you’ll continue paying the FHA mortgage insurance premium (MIP).
- VA IRRRL (Interest Rate Reduction Refinance Loan): Designed for eligible veterans and active-duty service members, with no appraisal or income documentation required in most cases.
JVM Lending offers both options and will help determine which program best fits your situation.
Is refinancing a good option for home improvements?
Absolutely. A cash-out refinance can provide low-interest funding for renovations or large expenses, often at far lower rates than credit cards or personal loans.
Why Homeowners Refinance with JVM Lending
At JVM Lending, we believe refinancing should be simple, transparent, and strategic. Our team provides detailed cost estimates upfront, explores multiple loan options, and identifies savings opportunities unique to your situation.
And for homeowners who purchased through JVM originally, our Rate Drop Free-fi™ Program ensures that when rates drop, they can refinance again at no cost – maximizing long-term value and peace of mind.
Ready to see how much you could save with a refinance? Contact JVM Lending today to review your options and learn whether now is the right time to move forward.
