Pay No Closing Cost To Refinance Mortgage

If you are having trouble paying your mortgage, there is an option you may have not looked into called a no closing cost refinance mortgage. Essentially what a bank will do is pay off your existing loan with another loan. This would make sense if the new loan has a lower interest rate which would in turn lower your mortgage payment. As interest rates change in the marketplace, refinancing can allow you to capture the savings that a lower interest rate and lower monthly payment.

Look at your current interest rate and compare it with the loans available and the terms of those loans. Consider refinancing if your existing mortgage rate is higher, you need to get out of an ARM or you will sell your home soon. But be careful because if you plan to sell in the distant future, you many not have time to break even on the home. Why? Because typically your rate will be higher if you choose a no cost option, which we will explain below.

Closing costs are always a part of the mortgage process. Mostly they are underwriting fees, appraisal fees, title fees and escrow. When going with a mortgage where you don't "pay" for these costs, often the lender will increase your loan rate by .25% - .50% because they are covering those costs for you. They have to be paid and since you aren't they probably are. The reason they do it is because they will make their money back and more with what they earn off your actual loan. It still may make sense though if the rate is lower than your current rate.

When the lender does cover your costs it can often look like this. Your mortgage balance before the new loan is processed is $100,000. You go through paperwork, sign new documents, and your new mortgage is for $108,000. Those costs are now a part of your loan BUT to do so... you paid nothing out of pocket. They just tacked it on. Yet now instead of a 6.875% interest rate it is now 5.50%. This is just an example but it is a representation of what actually occurs for many people.

In today's world, the name of the game is reducing expenses. Keep track of your credit, cut those costs on things you don't need and find ways to reduce your monthly spending. Refinancing your mortgage is certainly a great way to save. But be sure to do your homework. Read through the paperwork and ask questions and you will come out on top.