If you’re considering a no closing cost refinance offer for your next home loan there are several things you’ll want to know to avoid overpaying. There is a lot of bad advice and misconception when it comes to home loans; especially no closing cost refinance offers from big lenders like Amerisave and Bank of America. Here are several of the most common no closing cost refinance myths people fall for when mortgage refinancing.
1. No Closing Cost Refinance Loans Eliminates Fees
Choosing a no closing cost refinance offer doesn’t eliminate your fees; these home loans simply convert your out-of-pocket expenses to finance charges you’ll pay overtime with a higher mortgage rate.
2. I’ll just refinance again when a better offer comes along
No closing cost refinance loans have stiff prepayment penalties in the fine print. If you try and refinance before the penalty expires it’s going to cost you. Prepayment penalties are often as much as six months’ worth of interest on your home loan.
3. No Closing Cost Refinance is not the same as “Zero Cash”
Zero cash mortgage refinancing fees don’t get paid by the lender; all of the closing costs are rolled into your loan balance and you’ll pay interest on the balance for the entire duration of your loan.
There are no free lunches when it comes to mortgage refinancing. If you want today’s best refinance mortgage rates for your next home loan you’re going to have to pay closing costs, including the loan origination fee. One of the most common mortgage mistakes is focusing only on getting the lowest refinance rates at the expense of fees. All of the lender fees including your broker’s fee are negotiable and vary from lender to lender. Spend a little time haggling over fees and you can literally save yourself hundreds, if not a thousand dollars on your out-of-pocket expenses.
You can learn more about getting the lowest refinance mortgage rates without paying unnecessary fees by checking out my free Underground Mortgage Videos.