Home Refinance with No Closing Cost

Refinancing is very enticing these days as interest rates come close to historic lows. It’s almost a hundred percent sure that refinancing might be the best for you now, but there’s a factor that can be a downside. The closing cost of a refinance can typically reach around $4,000. It’s a good amount of money just to set aside for the closing cost. The good news is that borrowers can score a home refinance with no closing cost.

What is a no-closing-cost refinance?

No-cost refinance is when the borrower doesn’t have to pay thousands for the closing costs. The fees for appraisal, processing fees and underwriting will be waived by the mortgage company.

It sounds excellent, right? Nah uh. Don’t clap your hands just yet because there’s another side of the coin. Note that not because there are no upfront costs as you refinance doesn’t mean that it won’t cost you anything.

What are the extra costs of having no-closing cost refinance?

If you wave the closing costs, the mortgage company will most likely charge you with a higher interest rate. Sometimes, the mortgage company will add all of the tax and insurance escrows and closing costs onto your total mortgage balance. A whole new bigger total of mortgage bill will then come your way.

If your game plan includes staying long term in your home, it might be a good idea to pay the closing costs and enjoy the lower interest rate. Why? Over the long term, you’ll be more likely to pay more interest than you would have in closing cost.

Should you avail a No-Closing Cost Refinance today?

No-Closing Cost Refinance might not make sense to many people, but it does to those who will stay in their homes for more than five years. The slightly higher monthly interest payment they pay can most likely exceed the amount they would have paid in closing costs. This instance is most likely favorable if they sell or refinance the house within about five years.

Each buyer will have to compute two things. Know how long they will stay in the house and what the amount of higher mortgage interest payments would be over that period. The total of the two should then be compared to the possible total closing cost.

A no-closing cost refinances can also be beneficial to those who don’t have the cash for home renovations, but still, want to do so. Having a better deal by taking a slightly higher interest rate on the refinance loan than taking out a home equity loan. The situation depends on the interest rates for both loans.

If you want to avail a no-closing-cost refinance, you better compare loan choices before you choose one. Some websites allow you to compare lenders and see which of them offer the best.