A "no-cost" refinance mortgage is a loan wherein the broker or lender accedes to pay the closing costs for the borrower. This sort of loan is best for homeowners who need to obtain a new home loan with little upfront investment. The specifics of each no closing cost refinance vary. Every home loan has actual fees that must be paid. Whether fees are paid by the borrower or lender depends on the particulars summarized in the agreement.
A handful of mortgage lenders are not prepared to pay the closing costs. Even so, homeowners can still profit from a "no-cost refi." In place of an upfront disbursement, the settlement fees are incorporated into the new loan, and financed with the mortgage balance.
Pros of a No Closing Cost Refinance Loan
No closing cost refinances are preferred by borrowers with modest upfront cash. Standard closing costs are something like 3% to 5% of the purchase price, which can be expensive. When a mortgage broker or lender agrees to pay the fees, borrowers are not exempt from other fees. Specific costs are not built-in the "no-cost" agreement. These include pre-paid interest, escrow fees, and the home appraisal. Homeowners should plan in-advance, and set aside money to meet this expense.
Disadvantages of a "No-Cost" Refi Home Loan
No closing costs refinance mortgages costs more than traditional refi loans. To counteract for the lender paying the fees, borrowers are charged a higher interest rate. Customary rate increases are .25%. In view of that, homeowners shell out a higher monthly payment.
Financing the closing costs also has certain disadvantages. The mortgage balance increases, and because of interest, financing the fees will cost you more. Rather than financing the closing fees, borrowers with available cash might think about paying the cost out-of-pocket. In this instance, paying cash at closing is more cost effective.
List of Recommended Mortgage Refinance Lenders Online - We maintain a list of recommended mortgage companies online and update the list regularly.
Mortgage Refinance Lenders for Borrowers with Poor Credit- See our list of mortgage refinance lenders specializing in bad credit.
Article Source: http://EzineArticles.com/?expert=C.L._Haehl
Monday, September 24, 2007
Sunday, September 23, 2007
No Closing Cost Mortgage Refinancing is Just a Gimmick
If you’re in the market to refinance your mortgage you’ll find several national banks and mortgage companies bragging about their “no cost” mortgage loans. Are these loans truly “no cost” or are there really no free lunches when it comes to mortgage loans? Here are several tips to help you avoid overpaying when refinancing your home loan.
What does “no cost” mortgage refinancing really mean? Banks and mortgage companies never waive their fees; they simply offset them by marking up the interest rate. This is true of flat fee mortgages and the supposed no-fee refinancing offers you see on television. Advertisements promising a flat $395 fee or zero cost loans are never telling the whole truth about the loans. These offers are simply gimmicks used to trick homeowners into accepting loans with hyper-inflated interest rates.
Most mortgage companies and brokers slip .5% - .75% markup of your mortgage rate for their commission; however, these “no cost” loans typically and another .5% to this unnecessary markup known as Yield Spread Premium. This hyper-inflated mortgage rate means that you’ll pay more every month you keep the loan than if you had simply paid your closing costs. Depending on the amount of your loan this could add up to thousands of dollars every month!
This deceptive marketing is practiced by nearly every bank, Mortgage Company, and mortgage broker in the United States. When it comes to refinancing your mortgage there are truly no free lunches when it comes to flat-fee and no cost mortgage loans. You can learn more about your mortgage refinancing options including costly pitfalls to avoid with a free mortgage toolkit.
To get your FREE Mortgage Refinancing Video Toolkit, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this "Mortgage Refinancing Toolkit," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
Get your free mortgage refinancing tutorial today at: http://www.refiadvisor.com
Refinance Two Percent Lower
Article Source: http://EzineArticles.com/?expert=Louie_Latour
What does “no cost” mortgage refinancing really mean? Banks and mortgage companies never waive their fees; they simply offset them by marking up the interest rate. This is true of flat fee mortgages and the supposed no-fee refinancing offers you see on television. Advertisements promising a flat $395 fee or zero cost loans are never telling the whole truth about the loans. These offers are simply gimmicks used to trick homeowners into accepting loans with hyper-inflated interest rates.
Most mortgage companies and brokers slip .5% - .75% markup of your mortgage rate for their commission; however, these “no cost” loans typically and another .5% to this unnecessary markup known as Yield Spread Premium. This hyper-inflated mortgage rate means that you’ll pay more every month you keep the loan than if you had simply paid your closing costs. Depending on the amount of your loan this could add up to thousands of dollars every month!
This deceptive marketing is practiced by nearly every bank, Mortgage Company, and mortgage broker in the United States. When it comes to refinancing your mortgage there are truly no free lunches when it comes to flat-fee and no cost mortgage loans. You can learn more about your mortgage refinancing options including costly pitfalls to avoid with a free mortgage toolkit.
To get your FREE Mortgage Refinancing Video Toolkit, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this "Mortgage Refinancing Toolkit," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
Get your free mortgage refinancing tutorial today at: http://www.refiadvisor.com
Refinance Two Percent Lower
Article Source: http://EzineArticles.com/?expert=Louie_Latour
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