Cash-Out Refinance Closing Costs: I Paid $8,400—Here's the Complete Breakdown and Breakeven Calculation

When I decided to do a cash-out refinance to access $75,000 in home equity for debt consolidation, I focused on two numbers: the interest rate (6.875%) and the cash I’d receive ($75,000). What I didn’t fully appreciate until closing day was the third critical number: closing costs of $8,400.

That’s 11.2% of the cash I was accessing—a significant upfront cost that extended my breakeven timeline by 8 months. Here’s exactly what I paid, what’s negotiable, what’s required, and how to calculate if your cash-out refinance closing costs are worth it.

My Cash-Out Refinance Overview

Property and Loan Details:

Home value: $485,000 (appraisal)
Existing mortgage balance: $285,000
New loan amount: $368,400 (includes closing costs rolled in)
Cash-out amount: $75,000
Interest rate: 6.875%
LTV: 76%
Credit score: 712 middle score

Goal: Consolidate $62,000 in high-interest debt (credit cards and personal loans averaging 18% APR) and have $13,000 for emergency fund.

Complete Closing Cost Breakdown: $8,400 Total

Here’s every fee I paid, grouped by category:

1. Lender Fees: $3,150

Origination fee: $1,842 (0.5% of loan amount)

What it is: Lender’s fee for processing and underwriting the loan
Negotiable? Sometimes—shop multiple lenders
My experience: Some lenders quoted 1% origination ($3,684), others 0.5%, one offered no origination fee but 0.25% higher rate

Underwriting fee: $650

What it is: Covers the cost of reviewing and verifying your financial documents
Negotiable? Somewhat—may be waived or reduced
My experience: Non-negotiable with my lender

Processing fee: $425

What it is: Administrative costs for preparing loan documents
Negotiable? Sometimes—often bundled or waived
My experience: Standard fee with most lenders I quoted

Flood certification: $25

What it is: Determines if property is in flood zone
Negotiable? No—required by law
My experience: Standard minimal cost

Tax service fee: $88

What it is: Monitoring property tax payments during loan term
Negotiable? No—typically required
My experience: Standard with all lenders

Credit report fee: $120

What it is: Pulling credit reports from all three bureaus
Negotiable? No—actual cost
My experience: Standard tri-merge credit report

2. Third-Party Fees: $2,840

Appraisal fee: $650

What it is: Professional property valuation
Negotiable? No—required for cash-out refinance
My experience: Paid upfront before closing (non-refundable)

Title search: $275

What it is: Research to verify property ownership and identify liens
Negotiable? Limited—shop title companies
My experience: Required; price varies by company

Title insurance (lender’s policy): $1,240

What it is: Protects lender against title defects
Negotiable? Limited—regulated by state
My experience: Largest third-party fee; rate set by state

Settlement/closing fee: $425

What it is: Title company or attorney fee for conducting closing
Negotiable? Somewhat—varies by provider
My experience: Standard in my market

Recording fees: $185

What it is: County charges for recording new mortgage
Negotiable? No—set by county
My experience: Varies significantly by location

Survey fee: $0

What it is: Property boundary verification
Negotiable? Sometimes required, sometimes waived
My experience: Lender waived survey requirement (saved $400-600)

HOA certification: $65

What it is: HOA confirmation of good standing
Negotiable? No—if you have an HOA
My experience: Required for my property

3. Prepaid Items and Escrows: $2,410

Homeowners insurance (6 months): $1,080

What it is: Prepaying insurance premiums
Negotiable? No—required coverage
My experience: Lender required 6 months prepaid

Property taxes (3 months): $1,140

What it is: Establishing tax escrow account
Negotiable? No—required escrow
My experience: 3 months collected at closing

Prepaid interest: $190

What it is: Interest from closing date to end of month
Negotiable? No—based on closing date
My experience: Closed on the 25th so only 5 days of prepaid interest

4. Optional Fees I Declined: $0

Rate lock extension: $0

What it is: Fee if you need to extend rate lock beyond initial period
My experience: Closed within 30-day lock period

Discount points: $0

What it is: Upfront payment to reduce interest rate (1 point = 1% of loan amount = 0.25% rate reduction typically)
My experience: Didn’t buy points—extended breakeven timeline

Owner’s title insurance: $0

What it is: Protects you (not required, only lender’s policy required)
My experience: Declined—had owner’s policy from original purchase

What’s Negotiable vs. Required

Based on my experience shopping 5 lenders:

Negotiable/Shoppable (30-40% of costs):

Origination fee (ranged from 0% to 1% across lenders)
Underwriting fee (some lenders included in origination)
Processing fee (some waived)
Title insurance (shop title companies)
Settlement/closing fee (varies by provider)
Lender itself (rates varied 0.5% across lenders at same credit score)

Non-Negotiable (60-70% of costs):

Appraisal (required, set price)
Recording fees (set by county)
Credit report (actual cost)
Flood certification (required)
Tax service fee (standard)
Prepaid insurance (required coverage)
Prepaid taxes (required escrow)
Prepaid interest (based on closing date math)

My shopping saved approximately $1,800 by choosing a lender with 0.5% origination vs 1%, and competitive third-party fees.

Rolling Closing Costs Into Loan vs. Paying Out of Pocket

I had two options for handling the $8,400 in closing costs:

Option 1: Pay $8,400 Out of Pocket

New loan amount: $360,000 (just enough to pay off existing mortgage and get $75,000 cash)
Keep closing costs separate from loan
Benefit: Lower loan balance, less interest over time
Drawback: $8,400 less cash available

Option 2: Roll $8,400 Into Loan (What I Did)

New loan amount: $368,400 ($360,000 + $8,400 closing costs)
Closing costs financed into mortgage
Benefit: Preserve $8,400 cash for other uses
Drawback: Pay interest on $8,400 for life of loan

Cost analysis of rolling closing costs in:

Additional loan amount: $8,400
Interest rate: 6.875%
Additional monthly payment: $55/month
Additional interest over 30 years: $11,400 (total cost of $19,800 for the $8,400)

I chose to roll closing costs into the loan because:

Preserved cash for debt consolidation (my primary goal)
$55/month additional payment was manageable
I plan to refinance or pay extra principal within 5-7 years (won’t carry full 30 years)

If I pay an extra $55/month toward principal starting now, I’ll neutralize the added interest cost.

My Breakeven Calculation

The critical question: How long until my monthly savings offset the $8,400 in closing costs?

Before cash-out refinance:

Mortgage payment: $1,840/month
Debt payments (credit cards, personal loans): $1,520/month
Total: $3,360/month

After cash-out refinance:

New mortgage payment: $2,425/month
Debt payments: $0 (paid off with cash-out)
Total: $2,425/month
Monthly savings: $935/month

Breakeven calculation:

Closing costs: $8,400
Monthly savings: $935
Breakeven: 9.0 months

After 9 months, I’ve recovered the closing costs through monthly savings. Every month after that is net positive cash flow improvement.

At 12 months: $11,220 cumulative savings - $8,400 costs = $2,820 net benefit
At 24 months: $22,440 cumulative savings - $8,400 costs = $14,040 net benefit
At 36 months: $33,660 cumulative savings - $8,400 costs = $25,260 net benefit

As long as I keep the loan for at least 9 months, the cash-out refinance is financially beneficial despite the $8,400 closing costs.

When Closing Costs Kill the Deal

Cash-out refinance closing costs can make the transaction uneconomical if:

Scenario 1: Short-term homeownership

If you’re planning to sell within 2-3 years, closing costs may not be recovered
Example: $8,400 costs with $400/month savings = 21-month breakeven
If you sell at month 20, you’re out $400

Scenario 2: Marginal monthly savings

If debt consolidation saves only $200-300/month, breakeven extends to 28-42 months
Higher risk of life changes before breakeven

Scenario 3: High closing costs relative to loan amount

Closing costs on smaller loans ($150k) can be 3-4% of loan amount
Example: $6,000 costs on $150k cash-out to access $30k = 20% of cash accessed

Scenario 4: Can’t roll costs into loan and don’t have cash

If you need every dollar of the cash-out and can’t pay closing costs separately, you might not net enough cash to achieve your goal

Work with lenders at Browse Lenders to model different scenarios and calculate breakeven timelines based on your specific numbers.

How to Reduce Cash-Out Refinance Closing Costs

Based on my experience, here’s how to minimize costs:

1. Shop Multiple Lenders (Saved me ~$1,800)

Get at least 3-5 quotes with Loan Estimates
Compare origination fees, rates, and third-party fees
Don’t just focus on rate—look at total closing costs

2. Negotiate Origination and Processing Fees (Saved ~$920)

Ask lenders to reduce or waive origination fee
Some lenders offer no-origination loans with slightly higher rate
Processing and underwriting fees are sometimes negotiable

3. Shop Title Insurance (Could save $200-400)

Title insurance rates vary by company in some states
Ask lender if you can choose title company

4. Time Your Closing Strategically (Saved ~$170)

Close near month-end to minimize prepaid interest
Closing on the 28th means 2 days prepaid interest vs. closing on the 5th (25 days)

5. Don’t Buy Discount Points Unless Long-Term (Saved $3,684)

1 discount point costs 1% of loan amount ($3,684 in my case)
Reduces rate by ~0.25%
Breakeven on points alone is 4-6 years typically
Skip points if you might refinance or sell within 5-7 years

6. Ask About Lender Credits

Some lenders offer credits toward closing costs in exchange for slightly higher rate
Example: 0.25% higher rate = $2,000 lender credit toward costs

My Closing Costs: Worth It?

Six months after my cash-out refinance, here’s the verdict:

Financial results:

Closing costs paid: $8,400
Monthly savings from debt elimination: $935
Cumulative savings (6 months): $5,610
Breakeven progress: 67% of the way there

Additional benefits:

Credit score: 712 → 748 (36-point increase from lower credit utilization)
Interest savings: On track to save $28,000+ in interest over original debt payoff timeline
Financial stress: Significantly reduced (one payment vs. multiple debts)
Emergency fund: Built to $13,000 from cash-out proceeds

The $8,400 in closing costs will be fully recovered in 3 more months. After that, I’ll have $935/month in permanent cash flow improvement plus the credit score and quality of life benefits.

Was it worth it? Absolutely—but only because I ran the breakeven calculation and confirmed I’d recover costs within 9 months through monthly savings.

The Bottom Line: Know Your Numbers

Cash-out refinance closing costs typically range from 2-5% of the loan amount. For me, $8,400 on a $368,400 loan = 2.3%—on the lower end because I shopped aggressively.

Before you commit to cash-out refinance:

✓ Get detailed Loan Estimates from 3-5 lenders
✓ Compare origination fees, rates, and third-party costs
✓ Calculate your monthly savings from debt consolidation or other uses
✓ Determine breakeven timeline (closing costs ÷ monthly savings)
✓ Ensure you’ll keep the loan long enough to reach breakeven
✓ Consider rolling costs into loan vs. paying out of pocket

Understanding your middle credit score helps you qualify for better rates and lower closing costs—even a 30-40 point credit score improvement can reduce your rate by 0.25-0.5%, changing the entire cost-benefit equation.

For me, $8,400 in closing costs with a 9-month breakeven was a smart financial decision. Your numbers may differ, but the framework is the same: calculate breakeven, ensure you’ll stay long enough to recover costs, and shop aggressively to minimize fees.

Get detailed quotes from specialists at Cash-Out Refinance® to understand your specific closing costs and breakeven timeline.

Closing costs are significant—but they’re worth it when the math makes sense.

Editor’s Note: Closing costs vary by lender, location, loan amount, and property. The costs described reflect one borrower’s 2024 experience. Shop multiple lenders and request Loan Estimates to compare actual costs for your situation. Consult with licensed loan officers and financial advisors. Learn more at Browse Lenders®.