These days, many lenders offer a no Cost Mortgage Refinance. The prospect of getting a no cost refinance is very appealing especially if you cannot afford the closing cost. But no-cost mortgage refinance does not mean a refinance without any interest or fees. Usually, there are hidden costs in these kinds of offers. But it still does not mean that the lender is trying to deceive you. They offer these mortgage refinances to advertise themselves. You can still benefit from some of the offers. It actually depends on how carefully and thoroughly you review and select such an option.
Hidden Costs:
Many financers claim to provide no cost refinancing to attract borrowers. When you actually read their quotes, you will find several hidden costs. Many lenders add the extra charges and closing cost into your loan amount. The amount of interest will increase due to the extra costs and you will have to pay higher monthly charges. Only on the upfront will it look like you are saving a huge amount of closing cost. You should clarify the reasons behind a no cost mortgage refinance with your lender before choosing such an option.
Raised Interest Rates:
The interest rate in a no cost refinance is higher than the conventional refinance in which you pay the closing cost. The lenders pay your closing cost from the commission that they receive on the increased interest rate. In this case, your interest rate is higher than the regular rate, so, your monthly payments are also higher. You save a huge amount upfront but actually you pay that amount in your increased monthly charges. You should clearly understand the precise amount that you would need to pay every month and whether it suits your budget or not. Knowing the actual monthly cost will help you to make a suitable decision.
Why Is A No Cost Refinance Still A Good Deal For You?
Although monthly payments are higher in no cost loans, some borrowers can benefit from it. In your no cost mortgage, the lender pays the closing cost and charges higher monthly interest from you. If you are unable to cover your closing cost, this can be a good option for you. Though you will pay extra amount, you will pay it in monthly installments. You will not feel the burden of paying a huge amount.
But you should clarify even a small doubt before choosing no cost mortgage refinance. You should ask your lender to explain every aspect of the offer. You need to determine the real cost of the entire loan amount and how beneficial it will be for you.
No cost mortgage refinance is an attractive option for borrowers who want to save some money on their refinance. But one should carefully verify each and every detail before selecting this option.For more information on mortgage refinance rate, please visit mortgage refinance loan. Article Source: http://EzineArticles.com/?expert=Saurabh_K_Jain |
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