Anytime a home owner is trying to refinance their current loan they are always looking for the best home loan refinance rates. But most are also looking for the lowest closing costs as well and often times wonder if the mortgage refinance no closing cost loans are a good option for them. After all they sound great on TV!
The truth is that the mortgage refinance no closing cost loan will actually cost the average borrower more money then they actually save. unless you fit into a very narrow group of borrowers who this loan will actually work for you should look at other home mortgage refinance loans.
The Negatives Of A No Closing Cost Loan
- The no closing cost loan works on the simple principal that in order to get a reduced closing cost amount the lender will give you a higher interest rate.
- This rate is often one percent higher or more then the current home loan refinance rates that are available. While the up front savings may help you short term the loan will actually be about $100-$200 a month more the a standard loan payment.
- So in about 12 months you would have paid back anything you saved by not paying the closing costs. After that you would be losing money
Who Should Take A No Closing Cost Mortgage
- Borrowers who will only be living in a home for a short period of time of twelve months or shorter. This is typically people who will be relocating for work reasons or know they will be upgrading homes.
- Anyone who knows that they will have to refinance within twelve months can benefit from a mortgage refinance no closing cost loan as well.
- Borrowers who do not have the equity or cash to pay for closing costs on their home mortgages refinance loans but need to refi will not benefit but can be helped out of a financial tight spot with these loans. Just keep in mind you will not be getting the best home loan refinance rates when settling for this type of loan.
If you are considering a No Closing Costs Refinance take a moment to educate yourself and see if these loans are right for you. Investing just a few minutes of your time to learn more about the No Cost Refi you could save yourself thousands of dollars.
