Is It Possible To Refinance Your Home Without Paying Large Fees?

 In Blog, Real Estate Questions

Refinancing your home is an excellent way to reduce your month payments and decrease your long-term interest rates. As you continue to work and pay off your mortgage, you increase your credit score. This allows you to acquire lower interest rates on loans, effectively saving you thousands of dollars over long periods of time.

 

 

Costs Of Refinancing

What many people don’t realize is that the act of refinancing can cost you quite a bit. Here are some of the major costs of refinancing your home:

 

  • Title Insurance

When you refinance your home, you pay off your old loan. This means that the lender policy is going to expire and you’ll need to obtain a new loan policy. Getting a new policy provides investor assurance and can protect you against events prior to your refinancing.

  • Application Fee

To process your loan request, you must fill out an application fee. This gives the lender the ability to check your credit report to make sure that you are set to refinance.

  • Attorney Review Fees

 

You will need a lawyer to conduct the closing of your refinancing situation. The lawyer will charge his/her fees to the lending company, who will then charge them to you. These lawyers represent the real estate brokers, lending institutions, or other parties involved.

 

Besides the costs listed above, there are plenty of other costs including appraisal fees, credit fees, taxes, and more. When people can’t afford these types of fees, they consider what is called a no-cost refinance. The question is, are no-cost refinance plans legitimate and will they work for you?

 

 

No-Cost Refinance

One of the most popular ways to refinance your home is with a no-cost refinance. In short, it works like this:

 

  • You figure out whether no-cost refinancing is an option
  • If it is, your lender will pay your closing costs instead of you
  • As incentive for the lender, you will pay a higher mortgage rate (usually)

 

Think of a no-cost refinance as a trade-off. Yes, you don’t have to pay the massive fees upfront, though you will most likely have to take on a higher mortgage rate over time. If you don’t have the money to pay high fee costs up front, a no-cost refinance might be necessary.

 

 

How To Use a No-Cost Refinance To Your Advantage

First off, you must read the deal carefully. Some no-cost refinance deals pay all fees, while some only pay off a few such as origination and processing, while still charging you for third-party costs.

 

No-cost refinancing is an excellent idea in a few situations.

If you aren’t planning on keeping the loan for a very long time, no-cost refinancing won’t actually leave a big hole in your pocket. This is because those upfront fees will likely take many years for the lending company to recoup. If you buy your home with the intent to sell it soon, no-cost refinancing may be your best friend.

 

 

Conclusion

Be sure to check out different lenders to see if no-cost refinancing is right for you, as not all lenders offer the same options, let alone offer it at all! We hope that we answered your question with our short refinancing article!

 

Do you have experience refinancing a home on a small-dollar amount? Let us know in the comments!

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