A cash-out refinance replaces your current mortgage with a new, larger mortgage. The new loan pays off your existing loan, and you receive part of the difference in cash after paying any required costs, payoffs and fees.
Cash-out refinance closing costs are the charges needed to complete that new mortgage. They can include lender fees, appraisal fees, title and settlement charges, recording fees, prepaid interest, escrow deposits, discount points, mortgage insurance or program-specific fees.
Refinance costs are not the same for every borrower. The Federal Reserve says it is not unusual to pay 3% to 6% of the outstanding principal in refinancing fees, and those fees can vary by state and lender.
Cash-Out Refinance Closing Costs Basics
| Cost Or Term |
What It Means |
Why It Matters |
| Closing Costs |
Fees and prepaid costs paid to complete the refinance. |
They reduce the net cash you receive or increase your new loan balance if financed. |
| Cash-Out Amount |
The money you receive after the new mortgage pays off the old loan and costs. |
The cash you receive may be lower than the difference between the new loan and old balance. |
| Loan-To-Value Ratio |
Your mortgage balance compared with your home’s value. |
Cash-out refinances usually have maximum LTV limits that affect how much equity you can access. |
| Loan Estimate |
A disclosure that shows estimated loan terms, payments, closing costs and cash to close. |
It helps you compare refinance offers before committing. |
| Closing Disclosure |
The final disclosure showing actual loan terms and closing costs. |
You should compare it with your Loan Estimate before closing. |
How Much Are Cash-Out Refinance Closing Costs?
Cash-out refinance closing costs often fall in the low single-digit percentage range of the new loan amount, but the actual amount depends on your file. The Federal Reserve’s refinance guide says refinance fees of 3% to 6% of the outstanding principal are not unusual.
The table below uses simple examples to show how percentage-based closing costs can translate into dollars. It is for educational purposes only. Your actual costs depend on your lender, location, loan amount, title fees, appraisal, discount points, credits, taxes, insurance, escrow setup and loan program.
| New Loan Amount |
2% Example |
3% Example |
5% Example |
6% Example |
| $200,000 |
$4,000 |
$6,000 |
$10,000 |
$12,000 |
| $300,000 |
$6,000 |
$9,000 |
$15,000 |
$18,000 |
| $400,000 |
$8,000 |
$12,000 |
$20,000 |
$24,000 |
| $500,000 |
$10,000 |
$15,000 |
$25,000 |
$30,000 |
What Closing Costs Are Included In a Cash-Out Refinance?
Cash-out refinance closing costs usually include several categories: lender charges, third-party services, prepaid expenses, escrow deposits, government recording fees and any program-specific charges.
Some are paid to the lender. Others are paid to independent service providers or public offices.
| Cost Category |
Common Examples |
What To Check |
| Lender Fees |
Origination, underwriting, processing, credit report and discount points. |
Compare lender charges across Loan Estimates. |
| Appraisal And Property Fees |
Appraisal, inspection if required, flood certification and property review. |
Ask whether the appraisal fee is paid upfront or at closing. |
| Title And Settlement Fees |
Title search, lender’s title insurance, settlement fee, closing fee and notary fee. |
Some title and settlement services may be shop-able, depending on lender and state rules. |
| Government Fees |
Recording fees and local mortgage taxes where applicable. |
State and local charges can vary widely. |
| Prepaids And Escrow |
Prepaid interest, property tax deposits and homeowners insurance deposits. |
These are cash-flow items, not always lender profit or negotiable fees. |
| Program-Specific Costs |
Mortgage insurance, VA funding fee or other program-based charges. |
Costs vary by loan type and eligibility. |
Do You Pay Closing Costs On a Cash-Out Refinance?
Yes. You generally pay closing costs on a cash-out refinance because you are taking out a new mortgage. The costs may be paid out of pocket, deducted from the cash you receive, covered with lender credits or added to the new loan balance if the loan program and equity position allow it.
Even when you do not bring cash to closing, the costs still exist. If they are rolled into the loan, they increase the new mortgage balance and can increase the interest you pay over time.
Do Cash-Out Refinances Cost More?
A cash-out refinance can cost more than a rate-and-term refinance, but not always. The difference depends on loan size, lender pricing, points, loan-to-value ratio, credit score, title charges, appraisal requirements, state fees and whether you finance the costs.
Cash-out refinances may carry different pricing because the lender is replacing your existing mortgage with a larger loan and you are taking equity out of the property.
The added cost may show up as a higher rate, discount points, pricing adjustments, mortgage insurance or a smaller amount of cash available after closing costs. The only reliable way to compare is to review Loan Estimates side by side.
Do Cash-Out Refinances Have Higher Closing Costs Than HELOCs?
A cash-out refinance often has higher closing costs than a HELOC because it replaces your entire first mortgage. A HELOC is a separate line of credit secured by your home, and the fee structure can be different.
The CFPB’s HELOC booklet also notes that cash-out refinances generally have higher closing costs and may take longer to pay off your mortgage, while HELOCs typically have variable rates and repayment amounts that can change.
| Feature |
Cash-Out Refinance |
HELOC |
| Loan Structure |
Replaces your current mortgage with a new, larger mortgage. |
Adds a separate line of credit secured by your home. |
| Closing Costs |
Often higher because the full mortgage is refinanced. |
May have lower upfront costs, but fees vary by plan. |
| Rate Type |
Often fixed, depending on the loan. |
Often variable, depending on the plan. |
| Payment Pattern |
One new mortgage payment. |
Separate payment, often based on the amount borrowed during the draw period. |
| Best Comparison Point |
Compare new rate, total costs, new loan balance and cash received. |
Compare rate, draw period, repayment terms, fees and rate-change risk. |
Lender Fees And Origination Charges
Lender fees are charges from the lender for originating, processing, underwriting or pricing the new loan. They may include an origination fee, underwriting fee, processing fee, credit report fee or discount points.
Discount points are optional upfront costs that may lower your interest rate. Lender credits work the opposite way: they can reduce upfront costs, but they usually come with a higher interest rate. Compare the rate, monthly payment, closing costs and total interest before deciding whether points or credits make sense.
Third-Party Fees: Appraisal, Title And Settlement Costs
Third-party fees are paid to companies or professionals involved in the refinance. A cash-out refinance often requires a property valuation because the lender needs to confirm the home value and your available equity.
Third-party costs can include:
- Appraisal fee
- Title search
- Lender’s title insurance
- Settlement or closing fee
- Attorney fee where applicable
- Recording fee
- Flood certification
- Notary or document preparation fees where applicable
Some of these costs may be fixed by the provider or local rules. Others may be shop-able, depending on the lender’s requirements and state law.
Prepaid Expenses And Escrow Deposits
Prepaid expenses are upfront payments for costs that are due soon after closing. Escrow deposits are funds collected to set up or replenish an account for taxes and insurance.
Common prepaids and escrow items include:
- Prepaid interest from the closing date to the first payment period
- Homeowners insurance premiums
- Property tax deposits
- Initial escrow account deposits
If your old mortgage had an escrow account, your previous servicer may refund the old escrow balance after payoff. That refund does not always arrive at closing, so it is best not to count on it as cash available for the new transaction unless your lender confirms how it will be handled.
Mortgage Insurance And Program-Specific Fees
Some cash-out refinances can trigger mortgage insurance or program fees. The rules depend on loan type, loan-to-value ratio and borrower eligibility.
| Scenario |
Possible Cost |
What To Ask |
| Conventional Cash-Out Refinance |
Loan-level pricing adjustments, points or mortgage insurance depending on the file. |
How does my credit score and LTV affect pricing? |
| FHA Cash-Out Refinance |
Upfront and annual FHA mortgage insurance premiums. |
How much is upfront MIP, and how long will annual MIP last? |
| VA Cash-Out Refinance |
VA funding fee unless exempt. |
Am I exempt from the VA funding fee? |
How Cash-Out Refinance Closing Costs Are Disclosed
Federal mortgage disclosures help you compare and review refinance costs. Loan Estimate and Closing Disclosure forms are required for mortgage transactions.
- Loan Estimate: Shows estimated loan terms, projected payments, closing costs and cash to close.
- Appraisal and underwriting: The lender reviews the property value, title, credit, income, assets and eligibility.
- Closing Disclosure: Shows final loan terms and closing costs before closing.
- Closing: You sign final documents and the refinance funds after required waiting periods and conditions are satisfied.
What To Check On Your Loan Estimate
The Loan Estimate is one of the most useful documents for comparing cash-out refinance offers. Review more than the interest rate. The cost of the refinance can change your net cash, payment and long-term interest.
| Loan Estimate Item |
Why It Matters |
| Loan Amount |
Shows the size of the new mortgage after payoff, cash out and any financed costs. |
| Interest Rate |
Affects monthly payment and total interest. |
| APR |
Reflects interest and certain costs, which can help compare offers. |
| Origination Charges |
Shows lender-controlled fees and points. |
| Services You Can Shop For |
Shows fees that may be possible to compare with other providers. |
| Cash To Close |
Shows whether you owe money at closing or receive cash back. |
Can You Roll Cash-Out Refinance Closing Costs Into the Loan?
In many cases, you may be able to finance closing costs into the new loan if you have enough equity and the loan program allows it. Fannie Mae’s cash-out refinance guidance says the new loan amount can include the payoff of the existing first mortgage, financing of closing costs, prepaid items and points, and cash back to the borrower.
Rolling costs into the loan can reduce out-of-pocket cash at closing, but it also increases the mortgage balance. That can reduce the cash you receive and increase total interest over the life of the loan.
| Payment Method |
Pros |
Trade-Offs |
| Pay Out Of Pocket |
Keeps the new loan balance lower. |
Requires more cash at closing. |
| Deduct From Cash-Out Proceeds |
Reduces the need to bring cash to closing. |
Lowers the net cash you receive. |
| Finance Into New Loan |
Reduces immediate cash needed. |
Raises the balance and can increase total interest. |
| Use Lender Credits |
Can reduce upfront costs. |
Usually comes with a higher rate or different loan pricing. |
How To Calculate Maximum Cash Available
Your cash-out amount depends on your home value, current mortgage balance, closing costs, loan program and maximum loan-to-value ratio. LTV means the new mortgage balance divided by the home’s appraised value.
Basic formula: Home value × maximum LTV = maximum new loan amount
Cash available formula: Maximum new loan amount − current mortgage payoff − closing costs = estimated cash available
For example, assume your home is worth $500,000, your cash-out refinance allows up to 80% LTV, your current mortgage payoff is $280,000 and your closing costs are $10,000.
| Step |
Example Math |
Result |
| Maximum New Loan |
$500,000 × 80% |
$400,000 |
| Subtract Mortgage Payoff |
$400,000 − $280,000 |
$120,000 |
| Subtract Closing Costs |
$120,000 − $10,000 |
$110,000 estimated cash available |
This example is simplified. Your actual LTV limit may vary by loan type, property type, occupancy, credit profile and lender requirements.
Is a Cash-Out Refinance Worth the Closing Costs?
A cash-out refinance may be worth the closing costs if the cash helps accomplish a goal that justifies the new loan cost. Common uses include home improvements, debt consolidation, education costs, emergency reserves or other major expenses.
However, the cost is not only the upfront fee. You are also changing your mortgage balance, interest rate, repayment term and home equity. If you refinance into a higher rate or restart a longer term, the long-term cost can be higher even if the monthly payment looks manageable.
Ask these questions before deciding:
- How much cash will I receive after payoff and closing costs?
- What will my new monthly payment be?
- Will my interest rate go up or down?
- How much total interest will I pay over the new loan term?
- Am I using the cash for something that improves my finances or home value?
- Would a HELOC, home equity loan or rate-and-term refinance cost less?
How To Reduce Cash-Out Refinance Closing Costs
You may not be able to eliminate closing costs, but you can compare and manage them. Small differences in lender fees, points, title charges and credits can change the net benefit of the refinance.
- Compare multiple Loan Estimates. Review the same loan amount, rate type and cash-out goal across lenders.
- Separate lender fees from third-party fees. Lender charges are easier to compare directly across offers.
- Review points and credits carefully. A lower rate may cost more upfront, while lender credits may raise the rate.
- Ask which services you can shop for. Title and settlement costs may vary by provider, depending on state and lender rules.
- Check whether costs are financed. A low-cash closing can still be expensive if costs are added to the loan.
- Compare alternatives. A HELOC or home equity loan may have lower upfront costs, but the rate, repayment structure and risk may differ.
Cash-Out Refinance Process And Timeline
A cash-out refinance usually takes several steps. Timing varies by lender, appraisal, title work, documentation and underwriting complexity.
| Step |
What Happens |
Cost Connection |
| Application |
You provide income, asset, credit and property information. |
Triggers the Loan Estimate after application requirements are met. |
| Loan Estimate Review |
You review estimated rate, payment, closing costs and cash to close. |
Best time to compare lenders and negotiate costs. |
| Appraisal And Title |
The lender verifies property value and lien information. |
Appraisal, title and settlement costs may apply. |
| Underwriting |
The lender reviews borrower eligibility, equity, title and loan program rules. |
Conditions may affect final cash available or cost structure. |
| Closing Disclosure |
You receive final loan terms and closing costs. |
Compare with the Loan Estimate before signing. |
| Closing And Funding |
You sign documents and receive funds after required timing rules are met. |
Final costs reduce net cash or are included in the new loan if allowed. |
The Bottom Line
Cash-out refinance closing costs are the fees and prepaid costs required to replace your current mortgage with a new, larger loan. They can include lender charges, appraisal fees, title and settlement costs, government recording fees, escrow deposits, prepaid interest, discount points and program-specific charges.
A cash-out refinance can cost more than some other refinance or home equity options because it replaces the full mortgage and may involve different pricing or risk-based charges. Before choosing one, compare Loan Estimates, calculate your net cash after costs and review whether the new loan balance, rate and term fit your long-term plans.
Frequently Asked Questions
What Closing Costs Are Included In a Cash-Out Refinance?
Cash-out refinance closing costs can include lender fees, discount points, appraisal fees, title search, lender’s title insurance, settlement fees, recording fees, prepaid interest, escrow deposits and program-specific charges.
Do You Pay Closing Costs On a Cash-Out Refinance?
Yes. You generally pay closing costs on a cash-out refinance because it is a new mortgage. You may pay them out of pocket, deduct them from your cash-out proceeds, use lender credits or finance them into the new loan if allowed.
Do Cash-Out Refinances Cost More?
Cash-out refinances can cost more than rate-and-term refinances because they may involve different pricing, risk-based charges and equity requirements. The actual cost depends on the lender, loan type, loan amount, credit score, LTV, points, title charges and state fees.
Does a Cash-Out Refinance Cost More Than a Regular Refinance?
It can. A regular rate-and-term refinance usually focuses on changing the rate or term without taking significant cash out. A cash-out refinance increases the loan balance to access equity, which can affect pricing, closing costs and total interest.
Do Cash-Out Refinances Have Higher Closing Costs Than HELOCs?
Often, yes. A cash-out refinance commonly has higher closing costs because it replaces the full mortgage. A HELOC may have lower upfront costs, but it can still include application, origination, appraisal, title, annual, cancellation or other fees depending on the plan.
Can Closing Costs Be Rolled Into a Cash-Out Refinance?
Often, yes, if the loan program allows it and you have enough equity. Rolling costs into the loan reduces out-of-pocket cash but increases the new mortgage balance and can increase total interest.
How Do Closing Costs Affect the Cash I Receive?
Closing costs reduce your net cash if they are deducted from the refinance proceeds. For example, if your new loan leaves $80,000 after paying off your old mortgage and closing costs are $8,000, your estimated cash received would be $72,000.
Is an Appraisal Required For a Cash-Out Refinance?
An appraisal is commonly required because the lender needs to verify the home’s value and available equity. Some loan types or automated valuation options may vary by lender and program.
Are Cash-Out Refinance Closing Costs Tax-Deductible?
Some mortgage interest may be deductible if the loan meets tax rules, but many closing costs are not directly deductible. Tax treatment depends on how the funds are used and your personal tax situation, so ask a qualified tax professional.
How Can I Lower Cash-Out Refinance Closing Costs?
Compare multiple Loan Estimates, review lender fees, ask about lender credits, shop for allowed third-party services, avoid unnecessary points and compare whether a HELOC or home equity loan would better fit your cost and repayment goals.
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