No Closing Cost Refinancing

No closing cost refinancing is available from a number of lenders. However, before embarking on a formal request you should ask yourself a number of questions. The most fundamental question is whether you should refinance in the first place. This question could be caused because you want to move from a variable rate mortgage to a fixed rate mortgage. There are times when refinancing makes sense and at other times it is not advisable to pursue this option. One of the principal goals you could be looking to achieve is to improve your situation by reducing the monthly rates and/or the interest rates.

So, depending on your individual circumstances and financial position, you can decide whether to go ahead. Ask yourself some key questions including how much equity your home has. How long are you planning to remain in your existing home? Are you willing to pay up front in order to get access to lower interest rates?

You can normally get initial ideas of the options open to you from mortgage lender websites. You can enter your personal details, the amount you wish to borrow and understand the interest rates that you may have to pay. In addition, you will need to give the lender some idea of your financial position and that will help to get a precise answer. In most cases no closing cost finance will cost more in interest than closing costs applied packages so check the difference and decide which works best for you.

The pros and cons of fixed rate to variable rate refinancing
When considering your situation, it is generally agreed that applying for a fixed rate refinancing mortgage is the best idea. Should you find yourself in the initial year of an adjustable rate mortgage, sometimes known as an ARM and your plan is to move within the next 3 years, there probably is little sense in applying to refinance your mortgage. Should the rate of your ARM look like it is going to rise and you believe this rise could lead to further increases, it can make sense to apply for a fixed rate no closing cost mortgage, and at the same time delay your planned move to 7 years or more.

Will you need to pay more on a no closing cost refinancing mortgage?
Actually the difference will be very little or none at all. There may be some fees that you will be expected to pay up front. However, there is an advantage in that the refinancing mortgage can give you money to take out. This money can be used to settle a number of bills and any high APR loans you have outstanding, such as debts on your credit cards. It is a good move to clear out high interest debts so that your monthly outgoings are reduced to a minimum. It is also advisable to check with your financial advisor whether you are entitled to tax relief on the new refinancing mortgage you take out.

When does it make sense to “lock into” an interest rate?
Predicting what interest rates are going to do in the future is a less than exact science. Only one thing is certain, based on historical records, interest rates rise faster than they fall. Therefore, if you are looking at buying a new home apply for “lock-in” rates with the advantage that you can budget exactly what you will pay per month and will be protected from variation of interest rate rises. Should interest rates fall you always have the option of applying for a no closing cost refinancing package.

Do no closing cost refinancing loans really exist?
In reality, there are only a few loans that have no closing costs at all. Normally you will have to trade with the lender to negotiate the application fees and perhaps concede to pay for the title and appraisal costs. Do remember that a no closing cost refinancing loan will attract a higher rate of interest, as the lenders are not charities but businesses. It is possible for lenders to agree to absorb all the costs of the no closing cost loan and present them to you as a single monthly repayment amount. Therefore, in effect you have neither up front nor closing costs fees, and this is a no closing cost loan. However, considering that you have agreed to pay more for the facility it is not exactly a no closing cost loan.