subject: Pay No Closing Cost To Refinance Mortgage [print this page] A no closing cost refinance mortgage may be a big help, if you are having difficulty paying your mortgage. A refinance is loosely defined as paying off your existing loan with a new loan at a lower interest rate. By lowering your interest rate your monthly mortgage payment is reduced. Interest rates often fluctuate throughout the year and sometimes even throughout the day! Refinancing allows you to capture the savings a lower rate can provide.
First, take a look at your current interest rate and loan term (how long your loan is for) and compare it with what exists in the market. You may want to consider refinancing if your existing mortgage rate is higher or if you have an ARM (Adjustable Rate Mortgage) which is about to adjust higher. Be careful however because if you plan on selling the house over 5 years from the refinance date. This is because you may not have time to recoup the closing costs which have been "rolled into" the new mortgage loan.
Who pays for the no cost-refinance? The lender will pay the settlements and expenses including the underwriter fees, appraisal fees, title fees and escrow. The interest rate may be slightly higher on this loan, although if the interest rate is still lower than what you currently have you still will lower your payments. In some cases, this will save your credit, because you are now able to keep timely payments up to date on your mortgage.
Some lenders will add the closing cost to the loan and have it be a no cash refinance. This is something else you may want. This enables you to refinance without added expense of having to put money up front. For example a $100,000 refinance would become $108,000. Again just an example because every state and lender will have different associated costs. If the mortgage is at a lower interest rate, this is very advantageous to do. No out of pocket costs AND you get a lower monthly payment.
In today's world, the name of the game is reducing expenses. Keep track of your credit, cut those costs on things you don't need and find ways to reduce your monthly spending. Refinancing your mortgage is certainly a great way to save. But be sure to do your homework. Read through the paperwork and ask questions and you will come out on top.
