Refinancing your home is a big decision and we want you to have all the information you need
to decide if a no closing cost refinance is right for you. Whether you're looking to consolidate debt, decrease your monthly payment or build a backyard retreat, here is everything you need to know about a no closing cost refinance.
What is Refinancing?
Refinancing is the process of adjusting your current mortgage loan. Refinancing options are available whether you have an FHA, VA or conventional loan. Reasons for refinancing including decreasing your interest rate, changing your payment schedule, or revising other terms and conditions. Refinancing can save you thousands of dollars on your loan.
What are Refinancing Costs?
Refinance closing costs are typically 2-5 percent of the loan amount. These are the charges for a title search, recording fees and appraisal among other things.
For example, if you refinance a $311,000 mortgage, you’d be responsible for paying between $6,220 and $15,550 upfront when you go to closing. However, expensive fees don't always have to be the case. Some lenders offer a no closing cost refinance to qualified borrowers.
How Does a No Closing Cost Refinance Work?
To counterbalance no closing fees, lenders may increase the mortgage interest rate to cover the expense. This is how a lender recoups the closing costs, enabling borrowers to avoid bringing funds to the closing. Another option is to incorporate the closing costs into the total loan amount. This results in a higher payment with the fees paid over the life of the loan. It is important to note that in this case, interest is paid on the fees.
No Closing Cost Refinance: Con
A no closing cost refinance does have its disadvantages. For example, by rolling the refinance fees into the financing, you will pay more money over the life of your loan due to the increase of money borrowed overall.
No Closing Cost Refinance: Pro
Refinancing your current mortgage loan without paying any closing costs does offer an enticing advantage. For those current homeowners who may be paying 4-5 percent interest on your mortgage, refinancing to a competitive rate could save hundreds of dollars, resulting in a decreased monthly payment.
Is a No Closing Cost Refinance Right For You?
The decision to refinance with no closing costs is an important one. Here are two things to consider:
- Consider how the refinance will affect your monthly payment. Are you comfortable paying the closing costs over a longer period of time with interest?
- Consider that when refinancing and paying the fees upfront, it will take several years to break even, which is ok if you plan on staying in your home for a while. This is not a good option if you plan to sell anytime soon.
If you are staying put and want to save money by decreasing your monthly payment but have limited funds, a no closing cost refinance loan could work great for you. With the current decline of interest rates, chances are you could dramatically decrease your monthly payment.
How to Get a No Closing Cost Refinance Using a Digital Advantage
At Wyndham Capital Mortgage, applying for a home refinance loan has never been easier. Fast technology and professional guidance along the way create a painless digital refinance experience. Update all the necessary documents and information in your loan portal and you are off and running. Choose the refinance program that suits your lifestyle and lock in your rate. Notifications online or on the go keep you updated throughout the refinance process, ensuring you stay on track to get your cash or decrease your rate fast. Enjoy a simple, virtual closing when and how you want. Get started today with Wyndham Capital Mortgage.