How much does it cost to refinance in Michigan? A clear answer

The short answer

There is no single price for a Michigan refinance. Your total depends on your loan amount, the loan program, the rate you choose, and how much prepaid interest and escrow money has to be collected at closing.

What you can know for certain is where the costs come from and which ones Michigan law fixes. Refinance mortgages are exempt from Michigan transfer tax, and the county register of deeds charges a flat $30 to record a document, no matter how many pages it has or how large the loan is (MCL 600.2567). Everything else shows up, line by line, on the Loan Estimate, the standard three page form a lender must give you after you apply.

So the practical way to answer "how much will my refinance cost" is to get Loan Estimates for the same loan and read them the way this article explains.

Where refinance costs come from

Federal rules (Regulation Z, the federal Truth in Lending rules, at 12 CFR 1026.37) organize closing costs on the Loan Estimate into lettered sections. Knowing what each section is tells you who sets the number and whether you can do anything about it.

Page 2 of the form splits costs into two halves. "Loan Costs" are what it takes to make the loan. "Other Costs" are taxes, government fees, prepaid items and your new escrow account, which are mostly money you would owe anyway, collected up front.

What Michigan sets by law

Section E is the Michigan part of your bill, and it is short.

Transfer tax does not apply to the new mortgage. Michigan charges transfer tax on deeds and land contracts given for consideration. The State Real Estate Transfer Tax Act exempts "a written instrument given as security or an assignment or discharge of the security interest" (MCL 207.526(d)), and the County Real Estate Transfer Tax Act has a matching exemption for instruments given as security (MCL 207.505(d)). A mortgage is a security instrument, so a refinance mortgage is not taxed. For comparison, on a sale the combined rate is $8.60 per $1,000 of price ($7.50 state and $1.10 county), according to the Ottawa County Register of Deeds, and it is paid by the seller.

Recording is a flat fee. State law sets the register of deeds fee at $30 for entering and recording a document, regardless of the number of pages (MCL 600.2567(1)(a)). Your new mortgage is one document. A document that assigns or discharges more than one instrument adds $3 for each additional instrument (MCL 600.2567(1)(b)). One exception: the same statute lets a charter county set its own fee schedule, capped at the cost of the service, so ask your title company to confirm the figure for your county.

Michigan has no separate mortgage tax pegged to the loan amount. That is why the government fee line on a Michigan refinance is usually a small, fixed amount, even on a large loan.

Costs you can shop, and costs you can shrink

• Title services and lender's title insurance (Section C). Your lender must give you a list of providers, and you may use another one if the lender accepts it. Michigan title insurers file their own rates, so quotes can differ between companies.
• Prepaid interest (Section F). This covers interest from your closing day to the end of that month. Closing later in the month means fewer days to prepay. It does not lower the total cost of the loan, it only changes when you pay that interest.
• Homeowners insurance (Section F and G). The premium is set by your insurer, not the lender, and you choose the insurer. Shopping it can change both the prepaid line and the escrow deposit.
• Points versus lender credits (Section A and page 2, Section J). Paying points buys a lower rate for more cash up front. Taking a lender credit reduces cash at closing in exchange for a higher rate. The live rate table shows both sides for the same loan, priced in dollars.
• Financing costs into the loan. Many refinances let you roll costs into the new balance instead of paying cash. That lowers cash to close but increases what you owe, so compare total cost, not just cash to close.

How to get your real number

1. Decide the loan you want to compare: the same loan amount, program, term and rate type at every lender. Different loans produce different costs, so mismatched quotes tell you nothing.
2. Ask for a Loan Estimate. The Consumer Financial Protection Bureau (CFPB) recommends requesting them from more than one lender so you can compare.
3. Compare Sections A and B directly. These are set by the lender or by providers the lender picks, and the CFPB says the total is what matters, not how many line items there are.
4. Check Sections E, F and G for accuracy rather than price. Property taxes are set by your local government and insurance by your insurer, so make sure the estimates match your actual bills.
5. Look at page 3, the Comparisons section. It shows the APR (annual percentage rate, the cost of credit as a yearly rate including certain fees) and the Total Interest Percentage, which help you compare offers of the same loan type.
6. Work out your break even. Divide the true cost of the refinance by what it saves you each month, and compare that to how long you expect to keep the loan.

One more Michigan point: refinancing does not reset your property taxes

Michigan's taxable value cap resets only on a "transfer of ownership," and state law excludes a transfer for security, which is what a mortgage is (MCL 211.27a(7)(j)). Refinancing by itself does not uncap your taxable value. Your escrow payment can still change, because the new account is built from your current tax bills and insurance premium.

If your refinance also changes the deed, for example removing a former spouse or adding someone to title, that deed is a separate document with its own transfer tax and taxable value rules. Ask the title company how it will be treated before closing.

See today's rate for your scenario

Closing costs only make sense next to the rate they buy. The live Michigan rate table on this site shows today's rates with the APR and the dollar cost or credit at closing for each one, and the rate tool prices your own loan with no sign up.