Have you been putting off mortgage refinancing because of the cost involved with taking out a new home loan? There’s always a catch with no fee refinance offers which usually means a higher interest rate; however, it can get you a lower payment. Here are the basics you need to know about no fee refinance offers to help you get the best deal for your next home loan.
Do Straightforward No Fee Mortgage Loans Exist?
Mortgage rate shopping is a confusing and frustrating process for many homeowners. Spend any amount of time shopping for refinance rates and you’ll find lenders mainly promoting offers that include origination fees and discount points. In fact, finding zero point offers that don’t include a loan origination fee can be difficult for even seasoned homeowners. Why should you have pay discount points to get lower refinance rates?
New Rules From The Consumer Financial Protection Bureau
The Government is trying to make mortgage refinancing simple by requiring lenders to provide a “no fee” option alongside their standard offerings. These rules would require standards across mortgage lenders for how fees affect mortgage rates, prohibiting lenders from steering homeowners to more expensive home loans.
These new consumer protections will require lenders to offer a basic home loan with no upfront fees or points. Finding offers like this in today’s market usually requires the help of a mortgage broker and higher refinance rates to pay the broker fee. The goal of the Consumer Financial Protection Bureau is to make it easy for homeowners to make an apples-to-apples comparison of the best mortgage lenders when shopping for refinance rates.
No Fee Mortgage Refinancing Means Higher Rates
The no fee refinance offers on the market today have the loan origination fees tacked into the mortgage rates so you get a higher interest rate in exchange for not paying fees at closing. Paying fees and discount points is supposed to get you better refinance rates but some lenders take advantage of homeowners to boost their profits.
Not having cash to pay your closing costs shouldn’t prevent you from lowering your payments with today’s low refinance rates. It will make mortgage rate shopping much more difficult because of the different fees lenders roll into their refinance rates and a general lack of standards for these costs.
How to Shop for the Best No Fee Refinance Mortgage
Bank of America and Wells Fargo offer no fee mortgage refinancing but for many your best option may be to start with community based credit unions. Make sure you get a detailed explanation of what fees are being paid by taking higher refinance rates. If you have an FHA or VA home loan consider the streamline refinance options available with these home loans.
Underwater homeowners can now take advantage of the government refinance program HARP 2.0. The Home Affordable Refinance Program has been expanded making it easier to qualify. If you just don’t know where to start or who to talk to the Department of Housing and Urban Development offers mortgage counseling by calling (800) 569-4287 or (888) 895-HOPE.
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