Mortgage Refinance No Closing Costs: Whats The Catch?

Most of the time when you decide to refinance your loan there are many fees. There are ways to get a no fee mortgage refinance. No closing cost can be attractive but also dangerous. Closing costs are at times very hard to afford and can be avoided, but there is a down side – Interest will go up.

Mortgage refinance without closing cost can avoid fees like, title insurance, escrow charges, recording fees, appraisal costs, broker fees and more, but you will still have to pay insurance, interest, and all applicable taxes.

Why would you do it? If you would like to flip your home, If you would like to purchase another home within a few years selling this one, If you simply don’t believe you will own this within 5 or so years – yes it can very much be worth it. There are many online calculators which can help you find out where you break even between mortgages and let you know whether mortgage refinance with no closing costs is a smart choice. The calculators do this by finding out how much you would pay with the mortgage refinance with no closing cost every month for the length of the loan and contrast it to the cost of getting a loan with closing fees plus the closing fee itself. At this point it subtracts one from the other and comes up with an amount of months called your break even point. If you believe you will stay in the home longer than this point it is not worth it. At that point it is recommended you pay the closing costs so you save money later on which adds up quickly. Do the math and you will realize that if you keep the home for less than 5 years it is worth going no closing cost, but keep it much longer and you will see why there are so many advertisements for this type of loan.

Shop for all loan types paying special attention to weather it has a fixed or variable rate, what the rates are, and if it has closing fees. Always read the fine print, and always ask yourself “ why would they offer me something so nice” the answer more often than not is because there is something in t for them.