Refinance No Closing Costs Mortgage

2007-03-08 10:33:40

( Financial )



Refinancing involves applying for a new mortgage loan on your home. Individuals decide to refinance their mortgage to obtain a lower interest rate, and as a result make lower payments, to obtain equity from their property, so that they can get the cash to pay for various expenses, or to reduce the term of their mortgage.

There are closing costs involved when you refinance your housing loan. Common closing costs include: origination fees, homeowner’s and title insurance, escrow and legal fees, property taxes, notary fees, survey fees, private mortgage insurance (PMI), flood insurance, pest inspection fees, tax service fees, appraisal fees and annual credit report fees. Closing costs vary from county to county and from state to state, and are generally paid by both the borrower and lender. With a refinance no closing costs mortgage, the lender takes charge of paying all of the closing costs.

Refinance no closing costs mortgages can save you money if you purchased your property when the market interest rates were high, or if you have an adjustable rate mortgage. You can apply for a low fixed rate mortgage in exchange for your adjustable rate mortgage, so that your interest rate now remains fixed over the life of your loan.

You should carefully think about whether to apply for a refinance no closing costs mortgage. Although you are not required to pay closing costs with no cost refinancing, your lender will charge you a higher interest rate compared to the typical closing costs you would normally pay for. You can however apply for no cost refinancing whenever interest rates go down, and as many times as you wish because there are no closing costs involved.

If you have decided to proceed with a no cost refinancing, you should first ask your current lender if they would be interested in converting your current mortgage to a no cost refinancing mortgage before approaching other lenders. Your current mortgage lender may provide you with a better deal because of the long business relationship that exists between both parties.

If you wish to still apply for a mortgage, but find the mortgage refinance rates too high, you can also request your lender to include the closing costs to the loan. You should expect to be charged higher interest rates to the balance of your loan as a consequence to this.

Refinance no closing costs mortgages are only ideal if you plan to keep your house for two to three years due to the higher interest rates that are charged: keeping your home beyond this period when it is under no cost refinancing will make you spend more in payments.


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