No Closing Cost Refinance - Pros and Cons

If you are interested in a no closing cost refinance you need to be aware of both the pros and cons. There are reasons to consider this option when refinancing, as well as details that are sure to make you think twice.

Pros

The largest benefit of a no closing cost refinance is that you do not have to pay closing costs out of your own pocket. This means that you will be able to refinance without any upfront costs. A refinance will usually lower your payments, or help you take out cash from your property. Either way, you do not need money to save money with this type of loan product.

Cons

If you choose a no closing cost refinance loan there is one major drawback to think about. Since the lender is paying your closing costs, they are going to attach a higher interest rate to your mortgage. In most cases, this is somewhere between .50 percent and 1 percent higher than what you would normally receive. As you can see, although you will be saving upfront, since you are paying a higher interest rate you end up spending more in the long run.

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