Refinance With No Closing Costs
When you take out a home loan or mortgage it is subject to fees that must be paid. These fees can be paid for by the lender or borrower and depends on the details that are highlighted in the agreement. Refinancing with no closing costs is simply the money that must paid up front before a mortgage or loan is signed off and the finds released. The no closing refinance is ideal for the homeowner who needs to borrow more but with little cash needed up front. Of course each refinance offer can vary.
Some mortgage lenders are not willing to pay the associated closing costs but the homeowner can in fact still benefit from a “no-cost-refi”. Instead of paying the fees up front they can be added to the mortgage balance so they are paid back through monthly payments.
The homeowner generally prefers the no closing cost refinance option with the relatively modest up front cash fee. For standard costing costs expect to pay around 3-5% of the purchase price in costs which is expensive. When the lender or mortgage broker is in agreement to pay the fees the borrower will be then exempt from any other fees. The no-cost agreement does not have specific costs built into it. These include the home appraisal, escrow fees and pre-paid interest. The expense should be prepared for in advance so funds should be set aside by the homeowner for this.
When you refinance your mortgage there is no getting away from the fact that the closing cost have to the paid. You may refinance as interest rates have changed in order to meeting your monthly repayments. But the lender will profit from this hence this has to be borne in mind. They need to cover the cost of lending you the money in order to pay off your old loan. Using a no closing cost refinance option can be perfect for those who are desperate to re-mortgage but don’t have a lot of cash to hand.
Be aware that the no closing mortgage will cost the homeowner more than the usual refi loan. The borrower will be charged a higher interest rate to offset the lender having to pay the fees.
In certain circumstances taking out a short term personal loan can make a lot of sense to cover the costs of your refinanced mortgage. This will ensure that you are paying the very minimum in interest over the next few years. Of course this only makes sense if you anticipate being able to pay off the personal loan in a short space of time.
Like buying all products and services it pays to shop around for the best deals to get the lowest mortgage interest rate possible for your no closing cost refinance product. Many different lenders will have a range of interest rates for the privilege of no having to pay those closing costs.
The choice is yours: you either pay now for closing costs or have them added into your loan and pay later, month by month.