Who Pays Closing Costs on a Refinance in Florida?
If you’re considering refinancing your home, one of the first things you may wonder is, “Who actually pays the closing costs?” With a refinance, there isn’t a buyer and seller negotiating who pays the expenses. Instead, the homeowner who is refinancing is generally responsible for the costs associated with the new mortgage.
That doesn’t always mean you have to write a large check at closing, though. Depending on the loan, lender, and terms you negotiate, some costs may be covered through lender credits or added to the new loan.
Does the Homeowner Pay Refinance Closing Costs?
In most cases, yes.
When you refinance, you’re replacing your existing mortgage with a new loan. Because you’re the person applying for the new mortgage, you’re generally responsible for the associated expenses.
These may include:
- Lender origination fees
- Underwriting and processing fees
- Appraisal costs
- Credit report fees
- Title services
- Title insurance
- Recording charges
- Government taxes
- Prepaid interest
- Escrow deposits
- Discount points
The CFPB identifies many of these as common mortgage closing expenses.
Unlike a home purchase, there usually isn’t a seller who can simply agree to pay your refinance costs.
Can the Lender Pay the Closing Costs?
Sometimes, yes.
A lender may offer a lender credit that covers some of your closing expenses. This can reduce the amount of money you need to bring to closing.
But there is usually a tradeoff.
The lender may offer the credit in exchange for a higher interest rate or other loan pricing. The CFPB explains that lender credits aren’t necessarily free because the cost may effectively be recovered through the loan’s terms.
For example, you might have two options:
Option A: 6.25% interest rate + $8,000 closing costs
Option B: 6.50% interest rate + lender credit toward closing costs
The better option depends on how long you expect to keep the new mortgage.
Can Closing Costs Be Added to the New Mortgage?
In some cases, yes.
Instead of paying the costs upfront, you may be able to finance eligible costs into the new loan.
For example:
Existing mortgage: $300,000
Refinance costs: $8,000
Potential new balance: $308,000
This means you don’t have to bring the entire $8,000 to closing, but you’re borrowing more money.
You’ll then potentially pay interest on that additional amount over the life of the mortgage.
So a refinance with “little money out of pocket” isn’t necessarily a refinance with no cost.
What About Florida’s Mortgage Taxes?
Florida has some state-specific charges that homeowners should understand.
The Florida Department of Revenue states that mortgages and other evidence of indebtedness can be subject to documentary stamp tax at a rate of 35 cents per $100 of the amount secured, with no cap for mortgages.
Florida also has specific rules regarding who is liable for the tax. The Department of Revenue notes that all parties to a taxable mortgage document can be liable regardless of which party agrees to pay it.
This is one reason your title company or closing professional should explain the exact taxes and charges appearing on your refinance documents.
What Costs Might You Actually Pay?
Your final closing statement can contain several different types of expenses.
Lender Charges
These are fees associated with creating and processing your new mortgage.
Appraisal
If your lender requires a new appraisal, you’ll generally be responsible for that cost.
Title Services
Your refinance may require title work, including a title search and lender’s title insurance or related services.
Recording Fees
Documents associated with the new mortgage may need to be recorded with the appropriate government office.
Prepaid Expenses
You may also see prepaid interest, property taxes, homeowners insurance, or escrow deposits. These aren’t necessarily fees charged for the refinance itself, but they can increase the amount due at closing.
Can You Negotiate Who Pays?
A refinance is different from buying a home, but some costs can still be negotiated depending on the lender and loan structure.
For example, you can ask a lender:
“Can you offer a lender credit toward my closing costs?”
You can also ask whether there are different rate options with different upfront costs.
The important thing is to compare the overall cost, rather than simply choosing the option requiring the least cash at closing.
Is a No-Closing-Cost Refinance Really Free?
Usually, no.
A “no-closing-cost refinance” generally means you’re using a different method to handle the expenses.
You might receive a lender credit, accept a higher interest rate, or finance some costs into the new mortgage.
So if one lender says, “We’ll cover your closing costs,” ask:
“What happens to my interest rate and total loan cost?”
That question can reveal whether you’re actually saving money or simply paying the expense in another way.
Example of How the Costs Can Work
Imagine you owe $250,000 on your Florida home and decide to refinance.
Your new loan has:
- $5,000 lender and third-party costs
- $2,000 prepaid expenses
- $1,500 applicable taxes and recording charges
Your total amount associated with closing could be around $8,500.
You could potentially:
Pay the costs upfront, if permitted and preferred.
Use lender credits to offset some costs.
Finance eligible costs into the new mortgage.
The exact options available depend on the loan and lender.
How Do You Know Which Option Is Best?
Look beyond the amount you pay on closing day.
Suppose one refinance requires $8,000 upfront but gives you a significantly lower rate. Another requires almost nothing upfront but has a higher rate.
The second option may feel better initially, but you could pay considerably more interest over time.
Calculate the approximate break-even point by dividing your total upfront refinance costs by your expected monthly savings.
For example:
$8,000 ÷ $250 monthly savings = 32 months
That gives you an approximate break-even period of 32 months.
Frequently Asked Questions
Who normally pays closing costs when refinancing in Florida?
The homeowner refinancing the property is generally responsible for the costs associated with the new mortgage. However, lender credits or financing options may reduce the amount paid upfront.
Can a lender pay my refinance closing costs?
A lender may offer credits toward closing costs. However, the credit may come with a higher interest rate or other loan pricing, so compare the total cost carefully.
Can I roll closing costs into my refinance?
Depending on the loan and lender, some eligible costs may be added to the new mortgage balance. This reduces upfront cash requirements but increases the amount borrowed.
Does Florida charge taxes on a refinance mortgage?
Florida imposes documentary stamp tax on certain mortgage-related documents. The Department of Revenue states that mortgages are taxed at 35 cents per $100 of the amount secured, subject to the applicable rules.
Final Thoughts
So, who pays closing costs on a refinance in Florida? In most cases, the homeowner does.
But you don’t necessarily have to pay every expense out of pocket. Lender credits, financing certain costs into the new mortgage, and different loan structures may change how the expenses are handled.
Before choosing a refinance, ask the lender for a detailed Loan Estimate and compare the interest rate, lender charges, credits, taxes, title costs, and total amount you’ll pay over time.
The cheapest refinance isn’t always the one with the lowest closing costs today. It’s the one that gives you the best overall financial result for the amount of time you expect to keep the new mortgage.
