Mastering the Art of Negotiating Refinance Closing Costs: A Guide to Saving Money

December 3, 2023

It’s also important to recognize that while you may have some room to negotiate, lenders need to cover their costs and make a profit. So while you can try to negotiate, it’s important to approach the process with a realistic attitude, understanding that not all costs may be negotiable or the potential savings may be limited.

Factors that can influence negotiation

Several factors can influence the negotiation of refinance closing costs. One important factor is your credit score. Lenders may be more willing to negotiate if you have a strong credit history and a high credit score, as this indicates a lower risk to them. Your relationship with the lender may also play a role. If you have an existing relationship with the lender or have multiple accounts with them, you may have more leverage to negotiate closing costs.

Another factor to consider is the competitiveness of the lending market. In a competitive market, lenders may be more inclined to negotiate closing costs in order to attract borrowers. It’s always a good idea to shop around and compare offers from several lenders to determine if there are any differences in closing costs that could be used as leverage in negotiations.

Tips for Negotiating Refinance Closing Costs

While negotiation is not guaranteed, there are strategies you can employ to increase your chances of success. Here are some tips for negotiating refinance closing costs:

1. Research and Compare: Before approaching a lender, research and compare closing costs from different lenders. Having this information will give you a better understanding of what is reasonable and may give you leverage in negotiations.

2. Leverage your credit: If you have a strong credit history and a high credit score, emphasize these factors during negotiations. Highlighting your creditworthiness can demonstrate that you are a low-risk borrower, which may make the lender more willing to negotiate.

3. Leverage existing relationships: If you have an existing relationship with the lender, such as an existing mortgage or other accounts, mention this during negotiations. Lenders may be more willing to accommodate loyal customers.
4. Consider a No-Closing-Cost Refinance: Some lenders offer a no-closing cost refinance option, where they cover some or all of the closing costs in exchange for a slightly higher interest rate. This can be an alternative to traditional negotiation and may be worth exploring.

When negotiation may not be possible

While negotiation is worth trying, it’s important to recognize that there may be situations where negotiation is not possible or may not result in significant savings. For example, if you are working with a lender who has a strict policy regarding closing costs, they may be less open to negotiation. Additionally, if you have a low credit score or a history of late payments, the lender may be less willing to negotiate due to the higher risk associated with your application.

In these cases, it’s still important to evaluate the overall cost savings of refinancing. Even if you cannot negotiate the closing costs, the potential long-term savings from a lower interest rate or reduced monthly payments may still make refinancing worthwhile.

Closing Costs

While negotiating refinance closing costs is not guaranteed, it’s worth exploring the possibility. By understanding the nature of closing costs, researching and comparing offers, and leveraging your credit and existing relationships, you may be able to negotiate some savings. However, it’s important to approach the negotiation process with realistic expectations and the understanding that not all costs may be negotiable. Ultimately, the decision to refinance should be based on a comprehensive analysis of the potential benefits and costs, taking into account factors beyond closing costs. Consulting with a mortgage professional can provide valuable guidance in determining whether refinancing is the right financial move for you.


Can you negotiate refinance closing costs?

Yes, it is possible to negotiate refinance closing costs. While some closing costs are fixed and non-negotiable, there are certain fees that can be negotiated to potentially reduce your overall expenses.

Which closing costs can be negotiated?

Some of the closing costs that can potentially be negotiated include the lender’s origination fee, application fee, and processing fee. Additionally, you may be able to negotiate certain third-party fees, such as the appraisal fee, title search fee, and survey fee.

What strategies can be used to negotiate refinance closing costs?

To negotiate refinance closing costs, you can try the following strategies:

– Shop around and compare loan offers from different lenders to leverage competition.

– Use online rate comparison tools to gather information on prevailing rates and fees.

– Ask lenders to provide a Loan Estimate (LE) that details all the closing costs. This will allow you to compare and negotiate specific fees.

– Request a fee breakdown and explanation for each closing cost item to identify potential areas for negotiation.

– Be prepared to negotiate the interest rate, as a lower rate may offset some of the closing costs.

Are there any closing costs that cannot be negotiated?

Yes, there are certain closing costs that are typically non-negotiable. These may include government-imposed fees, such as recording fees, transfer taxes, and prepaid property taxes. Additionally, fees charged by third-party service providers, like credit report fees and flood certification fees, are often fixed and cannot be negotiated.

Can a mortgage broker help negotiate closing costs?

Yes, a mortgage broker can assist in negotiating closing costs. Brokers have access to multiple lenders and can leverage their relationships to negotiate better terms and fees on your behalf. They can also help you compare loan offers from different lenders to ensure you’re getting the most favorable terms.

When is it appropriate to negotiate refinance closing costs?

It is generally best to negotiate refinance closing costs during the loan application process, before you have committed to a specific lender. Once you have received a Loan Estimate (LE) from a lender, you can use it as a basis for negotiation. It’s important to start the negotiation process early to allow enough time for discussions and potential adjustments to the closing costs.