What Is A No-Cost Refinance?
A no closing cost refinance is an option available to borrowers which allows them to avoid paying all non-recurring closing costs. In this instance, the closing costs directly associated with the refinance are credited by the mortgage lender, resulting in the borrower not being responsible for these expenses.
It is important to note that these closing costs are NOT being rolled into the loan; they are completely being credited by your mortgage lender resulting in a true no-cost refinance.
What Are Some Of The Costs That Will Be Rolled Over?
A no closing cost refinance is a great solution for maintaining cash reserves and avoiding non-recurring closing costs. Recurring closing costs, however, include any costs that recur after the purchase closes. These costs include prepaid interest, property taxes, hazard insurance, and HOA dues (if applicable) and will be rolled into the monthly payments.
How Does A No Closing Cost Refinance Work?
This type of refinance is a great option for borrowers that don’t have the cash to pay fees at the time of closing. The biggest advantage of a no cost refinance is that since there are no closing costs associated with the refinance, the borrower does not need to worry about recapturing these costs in the future if they choose to sell or refinance the property again.
When Should You Choose A No Cost Refinance?
No cost refinances are usually a great option for 90% of all borrowers due to no down side. Some ideal positions to utilize this type of financing is:
- When you’re short on savings
- When it will still lower your interest rate and save you money
- When you don’t plan to be in the home for an extended period of time
If you don’t have the cash to cover upfront closing costs, but refinancing will lower your interest rate then a no-cost refinance may be a great option. There is zero expenses to you and you are instantly saving money upon the loan closing.
To find out if a no closing cost refinance is right for you, please reach out to us at (760) 930-0569 and one of our loan officers will be happy to answer your questions.