I have people ask me about no-cost refinances.
I wanted to take a minute and tell you exactly how a no-cost refinance works.
There are two pools of funds you have to address when you refinance…
1) Closing costs.
2) Pre paids. (taxes, interest, and insurance)
A no-cost refinance will cover your closing costs. You would still be responsible for the pre-paids (although we can roll them into the loan) – because you would pay these costs whether you refinance or not.
Now, if your current loan is escrowed you would be reimbursed the balance in your escrow account after closing. So, this would be a wash for you.
Let me give you an example of how a no-cost refinance works…
Let’s say your current rate is at 4.75%. …and let’s say normal closing costs on your refinance loan would be $4,000.
There are two ways to approach this refinance…
1) You can take the very lowest rate in the market at the time. …Let’s say it’s 4.00%. If you elect to go this route – you would either have to pay the closing costs yourself, or we could roll them into the loan. Either way, you are paying for the closing costs.
2) You could take a slightly lower rate – say 4.5%, and we (the lender) can pay the $4,000 closing costs for you.
Option 2 is a true no cost refinance. You were able to lower your rate and monthly payment for free. It didn’t cost you any money to do it!
If you would like for me to review your current situation for a no costs refinance – I’ll do it for free!
…just give me a call, or shoot me an email.
That’s it for today!
Have a good day today! …and thanks for reading.
Brett
