Refinance fees explained
Fees are one of the biggest reasons refinancing “looks good” at first and then fails on closer inspection. This page explains what fees are and how to treat them in your decision.
What fees usually include
- Origination or processing fees
- Title / registration-related fees (state-dependent)
- Documentation or administration fees
Two ways fees show up
- Paid upfront: you pay the fee at closing.
- Rolled in: the fee is added to the new loan balance.
If fees are rolled in, you may pay interest on them too.
How fees affect break-even
If a refinance lowers your monthly payment, those monthly savings can “pay back” the fees over time. If the payment does not go down, there may be no monthly savings to pay back fees.
Break-even is only one lens. You should also compare total cost and term length.
What to ask before you decide
- What are the total fees?
- Are fees paid upfront or added to the loan?
- Does the term change?
- What is the APR and is it fixed?