Are you seen one of those no closing costs refinance home loans? Are lenders that do not offer closing costs refinance home loans telling you the truth, or are likely to fall for one of result in many pay thousands of dollars? Here are some tips to help you make an informed decision before taking a refinance mortgage loan with no closing costs.
Taking a new home loan to buy or your existing mortgage loan of the refinance costs thousands of dollars in lender fees and closing costs. Refinance No closing cost sounds like a lot; However, you are probably familiar with the saying "there are no free lunches" and the same goes for your home mortgage loan. I mean why would lenders offer refinance no closing cost options unless there was something in it for them?
What your lender is not telling you about that no refinance home loan is that you trade pay a few thousand dollars floats when closing costs for a higher percentage of the mortgage and higher payments for the entire duration of your home loan closing costs. The following will illustrate why this home loans are a bad idea.
Mortgage originators get paid for the work they do your home loan in a number of ways. These brokers, companies, or Web sites cost you a creation for the work they do on your home loan, which on your good faith Estimate as a percentage of your home loan amount. They may also be a fee paid by the mortgage lender for marking your mortgage-interest, with or without your permission. This fee is what is used to pay your closing costs in the case of a refinance no closing cost home loan listing.
The fact that you do not pay closing costs or an origination fee, does not change that the person who arrange your refinance no closing costs home loan goes to get paid for their work. It just means that someone else the origination fee pays for you. What's wrong with that, you ask? Refinance No closing costs when someone else pays the origination fee should be a good deal ... what possible could go wrong?
The problem is that your lender your closing costs and origination fee in exchange for a higher mortgage rates charged. The fee lenders pay for locking and close your refinance no closing costs home loan with a higher mortgage rates is called Yield Spread premium and always results in a higher pay than necessary mortgage payments for the entire duration of your home loan.
Here is an example illustrating the impact of these annotations for your refinance no closing costs home loan. For example, suppose you are refinancing your home loan for $ 315,000 and your broker offers you a refinance no closing cost of 6.75%. While you don't have to pay the loan origination fee or other closing costs, (a typical loan origination fee is 1% of your home loan amount of $ 3,150 in this case) what your broker isn't telling you is that you might have had a 6.0% mortgage rates had you paid your origination fees and closing costs up front.
How does this affect mortgage rates higher than necessary, your monthly payments? In this example, the payment on a 30-year, fixed rate home loan costs you $ 2,043 per month. If you had your closing costs paid and received from the mortgage interest you earn on 6,0% your payment would only $ 1,888. That is a difference of $ 155 per month or $ 1,860 unnecessarily each year that you pay.
In just five years that origination fee of $ 3,150 that you avoid paying with a refinance no closing cost home loan will cost you a whopping $ 9,300, in 10 years you're from $ 18, 600 ...I think you get the picture why these loans are a bad idea. It is always best to pay your closing costs up front and to prevent the Yield Spread Premium which comes with refinance no closing costs home loan offers.
You can get more avoiding unnecessary formatting and unwanted costs to wholesale mortgage rates for your next home loan by checking my free Underground Mortgage refinancing videos.
Here's a quick example to begin today by a dirty secret exposing your lender would rather you not know ...
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