How much does it cost to refinance a home equity loan?

If you have a home equity loan, you may be considering refinancing it. That's especially true if you took yours out in or around November of 2023, when interest rates on these loans averaged over 9%.

But it can be difficult to decide to refinance a home equity loan, even if you have access to a lower interest rate. After all, it's important to make sure that when you refinance yours, it's worth the fees you'll pay to do so. 

You'll need to know what those fees are before you can decide if paying them is worthwhile. So, how much would it cost to refinance your home equity loan? We did the math below. 

Compare your home equity loan options now. 

How much does it cost to refinance a home equity loan?

Refinancing a home equity loan can be advantageous. And, the process is relatively simple. It typically involves taking out a new loan - presumably with a lower interest rate - to pay off your current one. But, when you do, your new loan will come with closing and other potential costs that you'll need to consider. For example: 

• Home equity loan closing costs: Your new home equity loan will typically come with closing costs ranging from 1% to 5% of the loan's value, according to Bankrate. This can include, but is not necessarily limited to, items ranging from insurance costs to loan origination and filing fees. 
• The value of your loan: Since closing costs are usually represented as a percentage of your loan's value, the total value of your loan will typically play a role in the total value of your closing costs. 
• Potential prepayment penalties: If you haven't had your original home equity loan long, you may need to pay prepayment penalties if you refinance it. Those penalties can range anywhere from 1% to 5% of the total value of the loan. 

Here's how much you can expect the cost of refinancing home equity loans with different face values to be based on the factors above: 

A $50,000 home equity loan

• No prepayment penalty: You can expect the total cost of refinancing a $50,000 home equity loan to be between $500 and $2,500. 
• Prepayment penalty: If you have to pay a prepayment penalty, refinancing a $50,000 home equity loan could cost anywhere from $1,000 to $5,000. 

Tap into a lower home equity loan rate now. 

A $100,000 home equity loan

• No prepayment penalty: You can expect the total cost of refinancing a $100,000 home equity loan to be between $1,000 and $5,000. 
• Prepayment penalty: If you have to pay a prepayment penalty, refinancing a $100,000 home equity loan could cost anywhere from $2,000 to $10,000.  

A $150,000 home equity loan

• No prepayment penalty: You can expect the total cost of refinancing a $150,000 home equity loan to be between $1,500 and $7,500. 
• Prepayment penalty: If you have to pay a prepayment penalty, refinancing a $150,000 home equity loan could cost anywhere from $3,000 to $15,000. 

Why it may be worth it to refinance your home equity loan

There are several reasons refinancing your home equity loan may be worth it.

"The first reason to refinance now would be for a lower rate," explains Mark Charnet, founder and CEO of the financial planning firm, American Prosperity Group. Did you take your loan out in or around November of last year when home equity loan rates were peaking? Have you improved your credit score since you took out your original loan? In either case, you may qualify for a lower interest rate that could produce meaningful savings. So, refinancing your home equity loan may be worthwhile. 

Refinancing may make sense if you need access to more capital, too. After all, you could use the refinance as an opportunity to access more of your equity by taking out a new loan for more than you owe on your original one. "If you are looking for a larger amount of capital, you might consider taking out more equity in a home equity loan," explains Alex Blackwood, CEO and co-founder of Mogul Club, a real estate investing platform. "Of course, this will come with a larger payment, but if the loan is needed to do something with a higher return on capital than the interest payment, it might be worth it." 

Get access to more equity and better terms by refinancing your home equity loan today. 

The bottom line

Multiple factors play a role in the cost of refinancing your home equity loan. Your current loan balance, the closing costs associated with your new loan and whether or not you have to pay a prepayment penalty will all help determine your overall cost of refinancing. But, covering that cost may be worthwhile - especially if you need access to more equity or if doing so will save you money over time with a meaningful interest rate reduction. Compare your home equity loan options today.