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Cost Of Refinancing
Are the Costs of "No Cost"
Refinancing Worth It?
by Craig Romero
Homeowners looking to
refinance are being hit with the option of ?no cost? refinancing. It
is extremely appealing to homeowners who do not have the cash on
hand to pay the costs of conventional refinancing or refinancing
through an upfront mortgage broker.
But does ?no cost?
refinancing actually come with no cost to the borrower? Not always.
When the big picture is taken into account, some ?no cost?
refinancing actually has costs that are pretty steep, but well
hidden. Most no cost financing options will have you paying ? a
point to 5/8 of a point more in interest than you would with a
full-cost loan.
Is there ever a good
reason to take advantage of a ?no cost? refinance? Yes, if the
interest rate you are paying now is significantly lower than the
current ?no cost? refinance rates. You may also want to consider
this type of financing if you plan on being in the house for a short
period of time, say from one to three years.
If you are not sure how
long you are going to be in your home, it is still okay to pursue a
no cost loan, and if you wind up staying in the home for a long
period of time, you can refinance at a later date.
For borrowers who are
considering a no cost refinance because they can not afford the
costs to refinance, dig a bit deeper. Many times when you refinance
you can roll the costs of your refinance into your loan, enabling
you to refinance without a large amount of money up front.
If you do decide to opt
for a no cost refinance, make sure that you are truly getting a no
cost, and not a hidden cost. With a no cost loan, you will not be
paying the lender fees or settlements; the lender pays for these
without increasing the cost of your loan. You will however be
responsible for per diem interest and escrow costs, though your
escrow costs will be credited at closing by your old lender.
Written by Craig Romero
Discover how
to quickly build a minimum of $40,000 worth of home equity and pay
your mortgage off in 10 years or less without making biweekly
mortgage payments. Visit:
www.wisemortgageinfo.com
Craig Romero is an author and mortgage analyst dedicated to
helping homeowners maximize the investment in their homes.
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