We know that there has been a lot of talk lately about refinancing! That is because a lot of you are refinancing or asking questions about refinancing. The housing market is a hot topic right now, as you know – and that includes refinancing! Believe it or not, it is possible to have a no-cost refinance. While this may be a little deceiving, it does not mean you will not have any fees. But it does mean you will not have to pay for the fees up front at the start of the process, but rather, include it into the balance of the loan. There are some lenders who will cover these types of fees but the interest rate may be higher. So in the end, you are still paying these fees.
If you choose to add your closing costs and other costs into your loan, keep in mind that your monthly payments will likely be more. You will also be paying more in interest over time as well. If this is something you are comfortable with and feel okay with doing, it is a great way to not have to pay all of these costs upfront. This option is not for everyone.
Another option is something called lender credit. This means that your lender will pay your closing costs and other fees, however your mortgage rate will be higher. This will obviously cause you to pay more money overall in the long run with a higher rate. However, if you do not plan to have the mortgage long and the home is not your “forever home” this may be a good option for you.
Going with a no-cost refinance depends on the homeowners financial situation and what is best for them in both the short term and long term. We would recommend you take a look at the finances as a whole and how much more money you will have to spend overall.