A no closing cost mortgage refinance may be a good deal for you, but it’s not without its downsides. Before you make a decision, you should take into account your home’s value, your budget and your credit rating. If you plan to stay in your home for a long time, then you will be better off paying for your refinancing upfront. However, if you’re planning to sell your home within three to five years, you probably shouldn’t spend the money.
The no closing cost route means no up front origination fee, but you’ll end up with a higher interest rate and a higher monthly payment. Paying for your loan upfront is also a drain on your savings. For example, a refinancing loan that costs $3,500 in up front fees will require a 4.25% interest rate, and the total amount you’ll pay over the life of the loan will be $16,000 more.
In addition to higher interest rates, a no closing cost loan may be associated with other fees, such as prepayment penalties. This is especially true if you are planning to move on soon.
Taking out a no closing cost loan is a clever way to save thousands of dollars over the life of your loan, but it’s not the only way to do it. You may also want to consider a cash-out refinance, which will allow you to use the funds for debt consolidation or to make improvements to your home. Often, these loans have more favorable terms than traditional refinances.
Using a no closing cost loan is a good idea if you plan to sell your home in a few years. You’ll also be freeing up your cash for other investments or emergencies.
Getting a no closing cost mortgage isn’t as easy as it sounds. Generally, you’ll need to provide a few months worth of income to qualify. If you don’t have a lot of money saved up, it’s a good idea to shop around to see what lenders can offer you. Many institutions have different lending criteria, so you’ll want to get an expert opinion on your individual circumstances.
The “No-Closing-Cost” loan is one of the newest innovations in home financing. It’s actually a type of lender credit. Lenders are allowed to charge a higher interest rate to recover their costs, and the best ones are designed to be easy to qualify for.
On the flip side, a no closing cost loan can be a great option for those who are moving up quickly. For example, if you’re refinancing a loan for a property with a $150,000 balance, you’ll only need $3,500 to cover the initial fees. As long as you know what you’re doing, you should be able to make the process go smoothly.
There are many options when it comes to no closing cost loans, so you’ll need to do your homework. Ask your mortgage company about the latest and greatest in terms of refinancing. They’ll be able to explain the benefits and drawbacks of each, and can help you find the perfect program for your unique situation.