No closing cost refinance loans are accomplished by accepting a slightly higher than current market interest rate. This is great option for those who intend to move within the next few years, or folks whose future may not be so certain. Typically the mortgage being paid off will need to be at least $150,000 or more in order to execute a no closing cost refinance. Amounts less than $150,000 may be required to pay for some 3rd party fees, such as title fees, an appraisal and filing fees. It is not typical for a borrower to opt for a mortgage without closing costs on a purchase transaction, just because most will assume they will likely keep their mortgage for 5 or more years. If you do intend to keep the home you are buying for a short period of time, you should definitely consider a no closing cost refinance.
The benefits of a no closing cost refinance vs. a closing cost refinance
Immediate break even, no time needed to recoup closing costs
No loss of equity with paying or financing closing costs
Mortgage interest is tax deductible, closing costs are not
Be aware that a no closing cost mortgage will require $400 application fee to pay for your appraisal, which can be refunded when your loan closes. The reason the application fee is required upfront is that appraisals are not performed by employees of American Midwest Mortgage Corporation, and appraisals are required to be paid at the time their service is provided.
If your property taxes and home owners insurance are included with your monthly mortgage payment it will be required to establish a new escrow account. The amount required to establish the new escrow account can be included (rolled into) the new mortgage amount, provided there is sufficient equity to do so. Any amount that is in your current escrow account will be remitted by your current lender/ servicer within approximately 2 weeks of the loan payoff.
If you would like a no closing cost refinance or low closing cost loan, contact me today
