April 14, 2024

By Sean A. Kelly

A no cost mortgage refinance is a loan in which you do not need to fork out any up-front costs when you apply for a refinance to take advantage of a lower interest rate. Many people do try to seek out no cost mortgage refinance loans so that they could save on the fees that are needed to pay for a refinance loan. These type of loans simply mean that you do not have to pay for closing costs of the loans. However, this facility is usually available for refinance loans and very seldom for new home purchase loans.

Before you go searching for a low or no cost refinance, bear in mind that this does not mean that the loan package is cheaper or better than conventional refinance loans. Sometimes the interest rates may be slightly higher to compensate for the absence of fees. So, essentially, this means the refinance loan isn’t exactly free. In fact, some lenders may charge an interest rate that is between .25 and .5 percent higher so that they could cover the costs of any fees that were supposedly ‘waived’ for you.


After considering this and if you are still interested in looking for no cost refinancing, you will need to look at the types of no or low cost mortgages available. The first kind is where you pay the lender fees and third-party fees but there will be no points. The second type is where you don’t have to pay lender fees but you have to pay third-party fees and finally, the third kind is where you do not have to pay anything at all but the fees and costs are covered by a slightly higher interest rate. Of course, there are also mortgages or even purchase loans that waive upfront fees and at the same time do not bundle it together with the interest rates but these are hard to find as they are rather rare.

No-cost mortgages, either type, are widely available with many major banks and lenders so if you are keen on getting one, then you should do your homework by comparing the loans offered by several banks or lenders. You may want to compare the interest rates, check the lender’s credibility through reviews by consumers and at the Better Business Bureau’s website.

Now, you may want to note that a no cost mortgage refinancing is best suited for those who are looking at a short term refinancing, as in they have plans to either sell the property a few years later or plan to refinance again. You may use this no cost mortgage refinancing to your advantage especially if interest rates are falling because you could move from one refinance to another at no absolute cost to you while saving money on interest rates. If you do not plan to do this and you have no intention to move out or sell your home in the next five years, then it is advisable that you pay the up-front cash for the closing costs and fees for your mortgage or refinance loan. Instead of looking for no cost refinance, you may want to spend your time looking for a mortgage refinance loan with the lowest interest rate and APR. This is because paying the closing costs is definitely lower than needing to pay for the additional interest that some financiers include in the loan if you opt for no cost mortgage refinancing.

Looking for a home refinance can be a very tedious process so do not rush into it but spend some time to read up and learn more about mortgage rates, refinancing loans and check the backgrounds of lenders you are interested to apply the loan from.

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