Consumption and Real Estate
Do no closing cost mortgage refinances really exist?
Question : Do no closing cost mortgage refinances really exist?
We have 13.5 years left on a 15 year home mortgage, 5.25% interest. We own more than 20% of the value of our house. We may live in this house for 30 years or we may sell and move to a bigger house in 3-8 years (Depends on how many kids we acquire). Since we don’t have a planned amount of time before we sell, and right now we are putting our spare money into retirement and tuition for my husband’s grad school, we don’t want to pay to refinance. We already had to pay $ 800 dollars to unlock our interest rate when rates dropped a percent after we locked our rate in Fall 2008.
I heard there is something where we would get a slightly higher than market rate but still lower than what we are paying with no closing costs. Do these exist or are they a scam? We are happy with our mortgage and all but if we could get an even lower rate without having to invest anything, I don’t see a downside.
Does this really exist? What is the downside? We have excellent credit.
no closing cost refinancing
Best answer:
Answer by lightupthesky25
I heard from a coworker the other day that Wells Fargo is offering no-cost refinances. I looked on their website and it doesn’t say no cost, but they do have a CostSaver refinance that says it has “little to no out-of-pocket closing costs.” Not sure if there are any stipulations regarding that but it might be worth looking into.
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#2 written by KL 1 year ago
Yes, they do. Each loan program (in your case a 15 yr) has about 15-20 interest rates associated with it. The lower the rate, the more you pay for it and the higher the rate the more the rate is paying back.
What we as lenders do is offer you the rate that is paying back enough to cover all of your closing costs. There are still costs, you just receive a “lender credit” to pay for them.
If you escrow make sure you bring the costs to set up the new escrow account to closing. Don’t wrap anything into the new loan amount.
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Yes, they do exist. I don’t think I could point you to a specific bank or loan program, but I have seen them advertised over the past year or two. The downside is that you’re paying that higher interest rate for the life of the loan than you would by paying the closing costs up front. That, ultimately, will cost you considerably more–although the monthly difference may hardly be noticeable unless you have a huge mortgage.
If you can find it, and if the deal sounds better than what you’re paying for now, I see no reason not to go for it.