For Additional Refinance Information (click here)
If you have been a client of mine previously, you know that we have offered $0 closing cost loans for a long time.
The key to a successful transaction with no closing cost is in the loan size. For clients with small loans (those borrowing less than $100k) this option may not be very appealing.
No closing cost options allow you to refinance with no cost or fees. The best part is you can lock in a lower rate now and close without having to worry about closing cost. If rates go even lower, you can refinance again with no cost or fees. The best part, is you have no “risk” in rates dropping even further as you paid no closing cost.
So what’s the catch?
Depending on your loan size, your rate may be slightly higher than the average market rate. However, if you are saving money even at the slightly higher rate, it makes complete sense to refinance with no closing cost. The key to making a no-closing cost loan work is in the loan size. The larger the loan, the easier it is to get no closing cost and a low rate.
Will paying closing cost get me a better rate?
Yes, paying closing cost will get you a better rate. However, it may not make sense to pay $1200 to $2000 in closing cost if the difference in rate is small. This is because it may take you longer to make back your cost. In addition, if rates were to drop further, you could be out the investment of closing cost should you elect to refinance a second time.
How can I lower my cost?
Some clients will opt to “split the difference”. By paying a portion of their closing cost, clients can reduce the amount of an increase in interest rate to make for a no closing cost option. Many clients will opt for the reduced closing cost option. Depending on your loan size, the cost to take advantage of this option may vary.
Do I have to have any money at application if I am doing a No Closing Cost Loan?
An application deposit is collected on all applications whether or not you choose a no or reduced closing cost option. That deposit is refunded to you at the time of closing.
