Refinancing your mortgage could lower your monthly mortgage payment, reduce your interest rate, and save you money over time. But before you go this route, it’s important to consider the closing costs involved with refinancing.

Several factors can affect refinance closing costs, including the loan size, type of refinance, and property location. If you’re prepared for these fees, refinancing could be financially worth it. In some cases, you might even be able to lower these costs and pay less for your refinanced loan.

Here’s what you need to know about refinancing closing costs and how to lower — or outright avoid — certain fees.

Refinance closing costs are the expenses — or fees — that come with getting a new mortgage to replace your current one. They’re either fixed or a percentage of your new loan amount.

In many ways, these costs are similar to the closing costs you have to pay when you purchase a home. As with your original home purchase, you may need to pay origination, home appraisal, attorney, application, and lender title fees when you refinance your mortgage. Depending on the lender, you may or may not have to pay for certain things again, such as inspection fees.

You might also have to pay recurring costs like property taxes or homeowners insurance when you refinance your mortgage. The types of fees and their amounts can differ depending on the lender. This means you could end up paying more — or less — based on which lender you choose.

Mortgage refinance fees are usually lower than home purchase fees, which average $3,860 nationwide, not including transfer taxes. In comparison, the average closing costs for a single-family refinanced home was $2,375 without taxes in 2021, according to CoreLogic’s Closing Corp report.

Refinancing a mortgage could be smart financially, but you should still consider the potential costs associated with it. Here are the most common fixed and percentage-based mortgage refinance closing costs and how much each one typically costs. Remember, these costs can vary based on your location and loan amount:

In all, you could end up spending between 3% and 6% of your current principal balance in refinancing fees.

A no-closing cost mortgage refinance, or no-closing loan, is a refinanced loan that doesn’t come with upfront closing costs. Instead, a mortgage lender or broker will typically either charge you a higher interest rate or increase the loan amount to cover the cost of the loan. As the borrower, you’ll then be able to pay back the closing costs over time.

Rolling your closing costs into a no-closing loan might be a good option if you:

If you’re thinking about getting a no-closing cost refinance, start by shopping around for the best mortgage rates. Check with different lenders to see if they offer this option or not. Then, choose the most competitive offer and apply.

Once a lender approves your loan application, schedule the closing date and finalize the process. You shouldn’t have to pay any extra money since the closing costs will be rolled into your new loan balance or a higher interest rate.

Here are some of the best ways to lower your refinance closing costs:

Here are some frequently asked questions about refinancing your mortgage.

In short, no. You will not lose equity when you refinance your mortgage loan. However, your equity could fluctuate with the market.

A mortgage refinance comes with several potential downsides. It could lead to a higher monthly mortgage payment if you opt for a shorter term. You also might not save as much as you expected if you go with a longer-term or have to pay higher closing costs. The refinancing process can also show up as a hard inquiry on your credit report, which could impact your credit score.

Most closing costs are not tax-deductible. However, you may be able to deduct certain costs from your loan when you file your taxes, such as when you use some of that money to pay for home improvements.