I get this question about closing costs a lot…
…When is it best to roll closing costs into the loan (on a refi)?
Keep in mind there are three ways to handle closing costs on a refinance loan…
1) The borrower can pay them out of his pocket at closing.
2) The mortgage company can pay them by charging a higher rate.
3) We can keep the rate low and roll the closing costs into the loan.
Here’s my advice…
If you are planning on staying in the home over 4 years – it’s not a bad idea to roll closing costs into the loan.
If you are planning on selling your home within the next 4 years – it’s not a bad idea to let the mortgage company pay your closing costs and going with a bit higher rate.
Brett
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