The refinancing bait is now powerful and interest rates fluctuate near historical lows. But refinancing has a potential disadvantage: cost, because refinancing closing costs are usually around $ 4,000. Can I refinance without closing costs?
Good news: you can get refinancing costs without closing. Thanks to refinancing costs without closing you won’t have to pay thousands of upfront closing costs for things like valuation, insurance and service charges – the mortgage company will endure them. Sounds great, right? Well, there’s a catch: just because refinancing doesn’t have any upfront costs doesn’t mean it won’t cost you.
What are the closing costs?
Closing costs are a set of expenses associated with buying or refinancing a home. These costs are independent of the home purchase price and may include:
- Lender fees: The lender charges a fee to set up the loan and consider the application. These fees will vary depending on the lender and type of loan. You will also pay interest on your mortgage in the first month.
- Third party fees: Your lender works with other companies when you get a mortgage, such as Appraiser, title company, and credit services. Closing costs will be used to cover these fees.
- Homeowner Fees: As a homeowner, you can incur various costs, including property taxes and home insurance. Tax and insurance payments are placed on a trust account. If your home belongs to an association of homeowners, fees may also be paid to it as part of the closing costs.
- Mortgage points: when closing, the lender can offer the option of paying mortgage points, also known as rebate points. This is the fee you pay directly to the lender to lower your interest rate and monthly payment. Purchase of mortgage points is commonly referred to as “interest rate reduction”.
When to choose refinancing without closing costs
Do you hope to move to another house soon? Refinancing a mortgage without closing costs may be for you. If you plan to stay home for only a few years, you probably can’t get back the refinancing savings you will pay anyway. This is the only option – other than waiting for purchase – for those who simply do not have savings to cover all initial closing costs.
This is the only option – other than waiting for a purchase – for those who simply do not have savings to cover all initial closing costs, However, not every lender offers an option without closing costs. According to NerdWallet, only a few lenders openly advertise a refinancing program with no closing costs. In fact, the US Bank was one of the few domestic lenders who found themselves in promoting a special refinancing program with zero closing costs.
It pays to look around with several different lenders because local banks and credit unions could advertise these options more often.