Can I Refinance at No Cost (or a Low Closing Cost)

No Closing Costs Refinancing Mortgage

Refinancing plans for no cost are great for people who do not want to live in their homes for a longer period of time. When you get a trade-off for a no closing cost refinance instead of an ordinary refinance, the difference is an additional interest rate of 2 percent. With a longer term view, it is not a beneficial deal, but in the short run it can help you to save huge amounts of money.

Start applying for no closing cost refinancing loans from either banks or other mortgage providers. Usually, refinance loans with no closing costs are not approved easily because they bring up lower up-front costs for the borrower. Always compare the rates of interest offered with the loan to those of the regular closing costs.

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Other Costs Except Refinancing Closing Costs

Assess the loan agreement vigilantly and look up for any other costs besides the closing costs which make the loan unappealing. You must remember that if there are no closing costs associated with the loan it does not necessarily mean that there are no appraisal fees, settlement fees and any other added costs. Check out for such terms and conditions specifically, for example, the loan origination fees, which will add up to 1 percent or even more to the cost of the mortgage.

Calculate the number of years you are likely to spend in the house with the loan to make it inexpensive to pay for the closing costs on your own.  You can now evaluate whether it is a commercially viable deal in the long term or not. It means you will be paying higher amounts of monthly mortgage.

Contrarily, a borrower can be charged 3 to 6 percent of the loan amount if he or she wish to refinance at a lower cost. The borrower has the choice to reduce the closing costs to make them more affordable. Negotiation of closing costs and research will help the borrower to save huge sums of money on the mortgage refinance.

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No Closing Cost Refinanacing Process

Start applying for a mortgage refinance with the present lender. You will be asked to fill up a loan application form. You will also be required to submit two months’ bank statements, two months’ pay stubs and two years tax returns. Make a request for Good Faith Estimate for your mortgage loan. Your present lender might also waive up certain amount of fees in order to help you retain your business.

You may also apply with two other lenders as well. You can also ask them for Good Faith Estimates on their mortgage options. Now compare all of the Good Faith Estimates. Pick the lowest estimate and ask the lender to strike that offer with the least amount of closing costs, if applicable.

Ask your lender to waive off the closing costs by means of increasing the interest rate. The lenders receive a combination of interest rates and closing costs. As a rule, higher rates of interest ensure greater profits to cover up the closing costs.

However, you must ask the lender information on streamline refinancing. It adjusts the term and rate, but not any part of the loan amount. This kind of refinancing reduces the fees and closing costs up to a great extent.

So What Is The Next Step?

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You are probably paying thousands of dollars per year in fees and interests to credit companies which could be going straight to your pocket. Don’t be cheap when it comes to financial education.. Ignorance costs more.

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