How to Get a No Cost Mortgage Refinance Loan
The Do's and Don'ts of Shopping for a Mortgage with No Hidden Fees or Closing Costs
Refinancing a mortgage is something that can bring you a tremendous amount of benefits, first and foremost the fact that you can end up with a lower monthly payment and even have some additional funds in the bank that you can use as you see fit. However, as anyone who has already gotten an initial mortgage knows, these loans aren't free. Not only do you end up repaying the loan with interest, but there are various fees and costs attached to the loan that will often drive up the overall price you eventually end up repaying. Closing costs can include everything from attorney fees to insurance costs and more, and they can add up quickly.
One option that exists, however, is the 'no cost mortgage refinance'. This is an aspect of borrowing funds that is well worth taking a closer look at because the true no cost mortgage has no application fees, no closing costs and no hidden fees rolled into the loan. Sometimes it's a good option, while in other situations it may not be worth the time or money. Knowing more about it is the first step to figuring everything out.
What Is a No Closing Cost Mortgage Refinance?
This type of loan is exactly what it sounds like – a loan that has none of the major closing costs associated with traditional loans. This means that there are no lender fees, no attorney fees, and no out of pocket costs that the borrower pays. Some costs may be present, but in a no refinance, the lender is the one that pays these costs.
The obvious benefits here are that a borrower will avoid paying large closing cost fees – something that can cost thousands of dollars that have to be paid out of pocket. However, it's important to understand that there is a difference between a no cost refinance and a no cost traditional mortgage:
Obviously, it's worth taking some time to determine what the overall terms and fees of your loan will be and how it will impact you. But paying attention to the basics above will help you understand what you're looking at when you start searching for your loan – and figuring out whether or not to get a no cost mortgage refinance.
Is It The Right Call For You?
The key here is to figure out what your current situation is and whether or not a no cost mortgage refinance will work best for you in the short and long term. As we mentioned above, the big difference is in the fact that those closing costs are still present, but aren't paid up front out of pocket. This means you need to consider a couple of things.
With those basic points in mind, you can consider what your options are. If you are able to raise the capital initially, it's usually better for you to pay the closing costs yourself. But if you are in a situation where coming up with closing costs is more difficult to do, adding them to the loan with a no cost mortgage refinance may be the right option. Consider both and make the choice that works best for you. Article written by James Swift