No Cost Refinance Loans Are Available to Qualified Borrowers

No Cost Mortgage Refinance

With record low rates, the ability to qualify for a no cost mortgage refinance loan is enticing to millions of homeowners, but is there a catch? With credible lenders, there is no catch with no cost refinancing. Lenders simply share their commission with the borrower in an effort to cover the closing costs. Expect to pay a .125 to .375 of a higher interest rate with most no cost mortgage programs. The "no cost mortgage refinance" makes sense to borrowers who like to refinance a lot. It also a good loan for new homebuyers who plan to trade up in a few years. Ask your loan officer about the pros and cons of a no cost mortgage refinance.

No Cost Refinancing with Fixed Mortgage Rates Starting at 2.75%

No Cost Mortgage Refinancing
Fixed Rate Refinancing

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Top 5 Reasons to Get a No Cost Mortgage When Refinancing

If you want to refinance your mortgage into a lower rate, one of the considerations is closing costs. Closing costs usually add several thousand dollars to your upfront costs when you refinance. However, there are now zero closing cost mortgages available when you refinance. In exchange for the lender paying closing costs, you can expect to pay approximately .125% higher interest rates. Still, opting for a no cost mortgage when you refinance has certain benefits:

#1 Closing Costs Are Expensive

Depending upon the state you live in, you may pay anywhere from 2% to 5% of the amount being financed in closing costs. If you are refinancing $200,000, this could cost you $2000 to $5000 up front, which is a lot of money out of your savings account. Note that closing costs generally are rising on mortgages because of many new federal banking and lending regulations. Many lenders pass their higher costs onto you.

#2 Paying No Closing Costs Up Front

Let's face it: One of the major obstacles to doing any type of mortgage is having to cough up several thousand dollars at the closing table. A zero cost mortgage loan allows you to avoid paying all of that money up front. Instead, you pay it over the life of the loan with a slightly higher rate. Many borrowers think that this is an acceptable trade off.

#3 Closing Costs Are Not Wrapped Into the Mortgage

A zero cost mortgage means that the closing costs are paid with the higher interest rate. The closing costs are not added to the balance of the loan, with you paying interest on that amount for the next 30 years. For many borrowers, the zero cost mortgage loan makes a lot of sense.

#4 Zero Cost Loans Are Available Through FHA

At least 35% of American home buyers purchase their home with a mortgage backed by FHA. If you opt to refinance your FHA loan, you can get a zero cost loan with no closing costs as well. For example, the FHA Streamline Refinance program does not require an appraisal or a credit check, so the closing costs are minimized. And any closing costs can be paid with a slightly higher interest rate.

#5 Zero Cost Loans Also Available Through VA

If you are a veteran and have a VA loan, you also can enjoy a zero cost mortgage refinance. With a VA refinance, a home appraisal is not needed and there is no credit check. The VA will work with the borrower to minimize closing costs and to work out ways to ensure that the borrower does not have to pay them up front.

Getting a refinance with minimal upfront cost is easier than ever before. You should talk to your lender about how to get a refinance with zero closing costs, keeping in mind that the closing costs may be paid via a higher interest rate.

Refinance with 0 Closing Costs

The guidelines and requirements for refinancing in the U.S. have improved this year for many types of loans. With the housing market finally improving, many homeowners are choosing the no cost refinance mortgage because it enables them to keep their outstanding loan balances where they are at, rather than raising them to finance the lender closing costs. We suggest comparing a few options between no point and no closing cost mortgage refinancing so that you will get the best loan for your financial goals. Let our lending experts help you find the best no cost mortgage today.
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