How to Refinance With No Closing Costs
No closing cost refinance loans are an excellent deal for individuals who aren't planning to stay in the same home for very long. The trade-off when getting a no-cost refinance loan relative to an ordinary refinance is an additional .2 percent to 1 percent on the interest rate. In the long term, that will usually be a poor deal for the borrower, but in the short term it can save you substantial amounts of money.
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Instructions
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Apply for no closing cost refinance loans from banks and other mortgage providers. Refinance loans without closing costs are slightly more difficult to be approved because of the lower up-front cost to the borrower. Compare the interest rates offered to you compared to those who have regular closing costs. These loans are not the same as "no-cost" refinance loans, which cover all fees related to the refinancing, including settlement fees for the original mortgage.
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Evaluate the loan agreement carefully. Look for other additional costs besides closing costs that may make the refinancing loan less attractive. Just because the loan has no closing costs attached to it doesn't mean that there are no settlement fees, appraisal fees or other additional costs. Check specifically for terms, such as loan origination fees, which can add 1 percent or more to the total cost of the mortgage.
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Calculate how many years you would need to remain in your home with the new refinancing loan for it to be less expensive to pay the closing costs yourself. Use this to figure out whether it's a good deal for you in the long term to go with a no closing cost refinance deal. It will mean that you will have to pay higher monthly mortgage payments.
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Close the refinancing deal when you're satisfied with the agreement you've reached. If you've been successful, the no-cost refinance will save you money over a regular refinancing, and you'll likely move out of the house before you end up paying more in interest fees.
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