Home Refinance No Closing Costs - Refinancing your mortgage usually includes closing costs, but some lenders offer no-closing loans that don't require a down payment.
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Home Refinance No Closing Costs
If you want to refinance your mortgage but don't have the cash on hand, you can avoid out-of-pocket costs by choosing a no-close mortgage refinance.
Refinance Online [fast & Secure Refinancing]
But don't make the mistake of thinking you'll get away with paying closing costs entirely—you'll usually pay a higher interest rate or, in many cases, closing costs will be rolled into your loan, increasing your balance and monthly payment with it.
A mortgage refinance includes closing costs just as your original loan did. These costs include the lender's origination fee, any mortgage points you purchase, the cost of an appraisal, and other costs as well. Typically, total closing costs are 2% to 5% of your home's price, although it varies based on your location and lender.
According to Freddie Mac, the average cost to refinance a mortgage is about $5,000. The exact amount you pay depends on your lender, their loan products, where you live and your credit balance.
Tip: Some lenders advertise refinance loans with "no closing costs." While they don't technically have a down payment, you'll usually pay the closing costs in a different way—either with a higher interest rate or by rolling them into your loan balance.
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It's possible that some of your closing costs can be waived entirely. For example, in a competitive landscape, some lenders will waive certain fees, such as an application fee or an origination fee, to get your business.
However, they likely won't waive every bill, and you may be left with costs beyond what you want (or can afford). If so, locking the costs into your loan balance and spreading them out over time can be a smart option.
A no-closing refinance is a refinance where you don't have to pay closing costs up front. Instead, you roll them into the loan by adding them to the principal amount, or the lender gives you credit for them and recovers the costs by charging you a higher interest rate.
Either way, you'll still pay closing costs, but instead of paying them up front, you'll pay them in installments over the life of the loan.
The Cost To Refinance A Mortgage (and How To Pay Less)
How does this work? Let's say you have 20 years left on a $100,000 mortgage with a 5% interest rate. You want to refinance into a 30-year loan with an interest rate of 3%.
To do this, you need to borrow $100,000 to pay off your current mortgage. In addition, you will have to pay loan closing costs, which are usually between 2% and 5% of the loan amount (in this case, $2,000 to $5,000). If you don't want to pay closing costs, you have two options:
Although you will still pay closing costs, the way you pay them makes this type of loan a good choice for some borrowers. Here are two main benefits when it comes to getting a no-foreclosure refinance:
With a no-close refinance, there are two obvious disadvantages. As useful as keeping your money is, there is a price to pay for convenience:
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No mortgage closing is likely to cost you more money in the long run, either by increasing your refinance rate or increasing your loan balance. Either way, you'll pay more for the mortgage over the life of the loan.
Be sure to shop around if you decide on a no-close refinance. Not all lenders offer these options, so comparing at least a few companies can ensure you get the loan you want at a rate you can afford.
Makes refinancing easy. You can see custom rates from our lending partners in the table below in just three minutes. We also offer transparency on lender fees that other comparison sites don't.
Aly J. Yale is a mortgage and real estate authority. His work has appeared in Forbes, Fox Business, The Motley Fool, Bankrate, The Balance and more.
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Closing Costs When Paying All Cash For A Home
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