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Is It Possible to Get a Mortgage Refinanced with No Closing Costs?


When it comes to refinancing a mortgage, you need to spend money to save money. Closing costs can amount to thousands of dollars, depending on the home loan. This is why the prospect of a mortgage refinance with no closing costs is so attractive.

But, is it real or a myth? Here’s the truth about zero-cost refinancing.

What “No Closing Costs” Really Means

When a mortgage refinance comes with no closing costs, consumers should be wary. That’s because there is actually no such thing as a cost-free mortgage refinance. It requires a variety of billable administrative research and work to complete:

  • Credit report fee
  • Appraisal Fees
  • Settlement or Attorney Fees
  • Title Fees
  • Recording Fees
  • Third party verification fees

The homeowner can pay these costs at closing, or the costs can be integrated into an ongoing payment plan. When a mortgage refinance has “no closing costs,” the fine print may require higher interest rates to cover what you would normally pay at closing.

Why You Pay for Closing Costs

Closing costs are part of the home purchase process. Since a mortgage refinance loan is viewed as another type of home loan by lending institutions, refinance packages require the same closing procedure.

Here are some of the most important closing costs:

  • Lender’s and Owner’s Title Insurance—Protects you from any title issues and ensures you are the official homeowner.
  • Appraisal—Confirms the value of your home and any equity gained since your initial mortgage.
  • Survey—Identifies property lines, structural changes, and geologic features of your property.
  • Insurance Reports—Conducted to determine if the home is in a flood zone, fire danger, etc.
  • Loan Origination FeesPaid for processing, lender research, and underwriting.
  • Home Inspection—Determines if any aspects of your home are in need of repair.
  • Settlement/Attorney Fees—One of the largest fees the borrower will pay.

All of these costs are necessary components of the refinancing process. Without these services, refinancing would be extremely confusing, complicated, and time consuming.

Closing Costs Can Be Regained

While closing costs may seem like a high price at the time, you can regain your losses in a reasonable amount of time by locking in a great refinancing rate. First Bank can help you find the best refinancing rate for your mortgage*, so you can save money in the long term and build equity in your home. Contact us today to discuss your mortgage refinance options.


*Loans subject to credit approval.

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Sources:
http://www.zillow.com/wikipages/List-of-Closing-Costs-and-Fees/
http://www.bankrate.com/finance/mortgages/is-no-closing-cost-mortgage-for-you.aspx
http://homeguides.sfgate.com/refinance-mortgage-closing-costs-2551.html
http://www.forbes.com/sites/moneybuilder/2012/03/28/the-no-cost-refinancing-myth/

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