You might be a perfect candidate for a no closing cost refinance if you are a:
- Borrower who currently has an interest rate over 4.75%.
- Borrower who hopes or plans to move within the next 1-5 years.
- Borrower who is unsure when you may move next.
- Borrower who wants to improve household cash flow by re-amortizing to a new 30 year fixed rate mortgage.
- Borrower who wants to build equity faster by switching to a shorter term.
- Borrower who is unwilling to lose equity by “rolling in” unneccessary closing costs
FAQ
Are there really no closing costs?
In most cases you will be required to pay an application fee of $400 to pay for an appraisal up front. This $400 will be reimbursed at closing. Since the appraisal is a necessary part of most refinances*, and they are a 3rd party (not affiliated with American Midwest Mortgage Corporation) we do have to pay them prior to receiving the appraisal. So I lied, but I didn’t. There are actually many other closing costs involved in the transaction, but are paid for by my company.
What terms, types, and loan amounts can be done without closing costs?
FHA, VA, and Conventional loans over $150,000. 30, 20, and 15 year no closing cost loan can be done with FHA and VA loans. For conventional no closing cost loans with terms of 30, 25, 20, 15, or 10 years are available.
How are my taxes and insurance handled on a no closing cost loan?
If your property taxes and home owners insurance are paid in conjunction (escrowed) with your mortgage payment, (escrowing these payments are required for FHA, VA loans, and also required for conventional loans over 80% loan to value) a new escrow account will need to be established when refinancing.
The amount required to establish the new escrow account depends upon when the next payments are due (to the county you live in for property taxes, and to your insurance company for home owners insurance). The new escrow account will be set up so there are between 7-8 months worth of property tax payments in the account when the half year tax bill is due. The extra 1-2 months is required to account for future shortages due to tax increases. The escrow account is also set up so there will be a full year premium to disperse when the next insurance bill comes.
What happens to my current escrow account?
The amount in your current escrow account will be sent to you typically within 2 weeks of the current loan being paid off. You can use that money as you wish.
What if my loan is not over $150,000, can I get a no cost refinance?
I can try, but the closer to $150,000 the lower the closing costs will be. For lower loan amounts, title costs, filing fees, and appraisal fees may apply. I would be happy to provide a custom quote for loans below $150k.
What kind of borrowers or mortgages might not be able to be offered a no closing cost option?
- Cash out conventional refinances above 70% loan to value (FHA cash out is ok).
- Investment properties
- 2-4 unit properties
- Conventional refinances with credit scores below 740 (FHA minimum 640)
- Conventional refinances with subordinate financing (2nd mortgages/ home equity loans)
Additional information about closing costs
Additional information about no closing cost loans
If you would like to know what rate can be offered with no closing costs please contact me.
*Streamline FHA refinances and some Making Home Affordable (HARP) loans do not require appraisals.
