When interest rates are as low as they currently are homeowners start looking into no cost refinancing in order to take advantage without having to pay a big amount of up front costs. The no cost loans can be found in most situations however they are most common in the home loan market. The truth is though that in order for the lender to make a profit on a no cost refinance, they ususally increase the mortgage rate quoted to you by .25% - .50% in order to cover their costs on closing a mortgage refinance. Mortgage lenders do not give away anything for free. There are 3 types of “No cost” loans which are the most typical types available. There is a no added on interest option where you pay the lender and any third party costs. There are lender fees that cost you $0 but you are responsible for any third party costs. Finally there are no cash needed at all loans where all the fees and costs are taken into account by the interest rate you get. A true no cost closing loan, where the lender pays all the fees and costs related to the refinancing without increasing your loan amount is a very rare and hard thing to find. If you are not going to live in your home for to many more years, a no cost refinance may be the best choice for you. You can avoid paying a large closing fee while being able to leave the home and its mortgage before you start wishing you could have a lower payment. However, if you plan on staying in your home for a long time then the best decision is probably to pay any and all closing fees upfront. This way you will avoid paying interest on these fees over the course of your mortgage. No cost mortgages are most often found at major lenders and banks. When researching potential home mortgage lenders make sure to compare quotes. Once you get a quote you like from a potential lender make sure that quote is in writing. Take the written quote to different lenders and watch them scramble to meet or beat the quote you brought them. Often they will be able to beat or at least meet it in some way. Ask plenty of questions of any potential lenders and if you feel uncomfortable do not ever be afraid to just leave and find a new mortgage lender.

-M Petrone

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