 How the no closing costs refinance works
It's fairly simple. The interest rate you get on your home loan refinance is higher using this option than it could be if you paid your closing costs out of pocket or added them to your existing loan balance.
Say, for example, you currently have a $400,000 mortgage at 7.25% and decide to do a home mortgage refinance loan when the market rate is 6%. However, in your planning you decide it's in your best interest to lock a 6.75% rate under the no closing costs refinance option.
When your loan is sold on the secondary market your lender would get enough rebate to cover your closing costs. The advantage to you is that you haven't increased your loan balance and you've dropped your rate by .5%.
Even though you may have heard gurus say don't refinance unless your new rate is 2% below your old rate, it just isn't true. In the home loan mortgage refinance arena you simply can't go by "rule of thumb" advice.
As we said earlier, you need to carefully review every aspect of your proposed home loan refinance. That's where we add value, by asking the questions you may not have considered, and actually taking the time to be sure you understand everything about your refinance mortgage.
More Questions? Call Us!
Are you a California resident? One of our experienced team of loan officers will be happy to consult with you. Call 800-325-2062 today and ask for a no closing costs refinance specialist. You'll be glad you did. |
