How to Refinance Your Home With No Closing Cost
Acquiring a mortgage refinancing loans with no closing cost can require multiple applications and intensive negotiation with borrowers. The closing cost can add on much to the total cost of refinancing, in some cases making it uneconomical to refinance. No-closing cost refinancing will usually only be available to individuals or families with good to excellent credit ratings. In addition, most no-closing cost refinancing loans will have a higher interest rate, which makes for larger payments over the lifetime of the loan.
- Difficulty:
- Moderately Challenging
Instructions
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Ask lenders about refinance loans with no closing costs. Apply for refinancing loans that are specifically advertised as "no closing cost." Alternatively, you may apply for normal refinancing loans and then try to negotiate for no closing cost with the loan officer. Be prepared to pay a slightly higher interest rate than you would otherwise if you take that route.
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Determine your eligibility for the federal Making Home Affordable program. If your home is made up of four units or less, you are current on your mortgage payments and your current mortgage is 125 percent of the current market value of your home, you may be eligible for refinance subsidies under this program. The company that provides your refinance loan will get subsidy payments from the federal government, which may enable the lender to provide you with lower rates.
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Compare your refinance offers with others. Show printouts of better refinancing offers to other lenders to give you negotiating leverage when trying to lock down lower rates.
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Calculate how much more you will pay over the life of the refinancing loan with the higher interest rate relative to an ordinary mortgage with closing costs. If you are only planning to own the home for a short time, getting the refinancing deal with no closing cost may be the superior financial decision. Determine how much money you will save with the refinance loan relative to your current mortgage.
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Review the refinancing agreement carefully before signing it. Ask the loan officer that you're dealing with whether there any "third-party" fees that may not be readily apparent on the mortgage agreement. In some cases, unscrupulous lenders will lure in eager buyers with promises of no-cost refinances, but then surprise them later with tacked-on fees for obscure reasons.
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